North American Consumer Confidence Drops

by Jordan Yerman | October 17, 2008 at 07:43 am

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Lower fuel prices should make us happy, but North American consumers refuse to cheer up.

Americans felt less secure after the Standard & Poor's 500 Index fell every trading day but two so far this month, the credit crunch intensified and businesses cut more jobs. Further cutbacks in consumer spending, which accounts for more than two- thirds of the economy, will deepen a recession.

``Even gasoline-price decreases were overpowered by the massive destruction of wealth,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. ``Things are pretty awful in the economy and that should make itself felt through weaker consumer spending.''

"Less secure" sounds pretty good compared to how we're feeling up here in Canada, where consumer confidence is at a 26-year low. Lat time the outlook was this dismal, dolphin shorts and wrist-bands were acceptable street-wear.

Based on a poll of 2,000 people between Oct. 2 and 8, the conference board said its index of consumer sentiment fell 11.9 points to a reading of 73.9. That was the weakest point since the third quarter of 1982, when Canada was stuck in recession.

"The global credit crunch and major stock market declines clearly had an effect on consumer confidence in October," said Pedro Antunes, director of the conference board's national and provincial forecast.

"In addition, consumers felt that they would be worse off in six months, indicating concerns that the financial crisis would not be resolved quickly," Antunes said.