October 31, 2011 (Chris Moore)
Consumer confidence improved slightly in October but consumer confidence in the governments economic policies were at an all-time low according to the latest Surveys of Consumers by Reuters/University of Michigan.
More favorable economic news this month improved consumer confidence but consumers continued to be very pessimistic about their financial prospects in the year ahead.
Three-fourths of the consumers surveyed expected their finances to remain stagnate in the year ahead with only one-in-five expecting to see an improvement in their finances. Only 38 percent of the consumers expected their income to increase during the next year, a record low for the surveys.
When it came to the government’s economic policies, 57 percent of all consumers had a negative view of the current policies, the highest proportion ever recorded. Only 7 percent of the consumers rated the government’s current policies favorably.
Consumers expressed widespread distrust with the President, Congress and the Federal Reserve. When asked about their confidence in the Federal Reserve, 61 percent of the consumers said they had less confidence in the abilites of the central bank compared to 49 percent reported in 2009 and 2010.
All three indices that make up the Index of Leading Economic Indicators posted gains in October, but were down from last year’s levels.
The Consumer Sentiment Index climbed 2.5 percent to 60.9 in October, up from 59.4 in September but down 10.0 percent from 67.7 in October of last year.
The Consumer Expectations Index increased to a level of 51.8 in October, up 4.9 percent from a level of 49.4 in September and down 16.3 percent from a level of 61.9 in October 2010.
The Current Conditions Index climbed 0.3 percent to 75.1 in October, up from 74.9 in September but down 2.0 percent from 76.6 in October of last year.
Richard Curtin, Surveys of Consumers chief economist said, “Consumers have always trusted the government to initiate policies that would foster renewed growth in jobs and incomes. The widespread distrust of the President, Congress, and the Federal Reserve is now an important cause of pessimism. The upcoming debates about spending cuts and tax hikes surrounding the budget resolution will increase uncertainty and cause consumers to become even more prudent spenders. Although a renewed downturn in the economy has a 50-50 chance of starting around the start of 2012, it is even more likely that growth will not be robust enough to restore consumer optimism about their job and income prospects.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations
Reuters/University of Michigan