Consumer Confidence Hits Record Low in December

Consumer confidence reached a new record low in December, thrashing the moderate gain in confidence reported in November, according to indices released Tuesday by The Conference Board Inc. The December index fell to 38 — with a baseline confidence reading of 100 in 1985 — from the 44.7 index recorded in November. The present situation index plummeted to 29.4 from 42.3 the previous month, while the expectations index decreased slightly to 43.8 from 46.2 in November, demonstrating the widespread sentiment among consumers that things continue to get worse in the economy and the chance of things getting better continues to diminish. “The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,” said Lynn Franco, director of The Conference Board consumer research center. “Both [present situation and expectations] sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom. In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.” The survey, based on a representative sample of 5,000 U.S. households, also showed consumers’ appraisal of current conditions ranking worse in December from the previous month. According to The Conference Board, 46 percent of respondents claimed “bad” business conditions in December, from 40.6 percent in November, while those claiming “good” business conditions in December have declined to 7.7 percent from 10.1 percent the previous month. Forty-two percent of respondents indicated jobs are “hard to get” in December, up from 37.1 percent the previous month, while only 6.2 percent of respondents indicated jobs are “plentiful,” down from 8.7 percent in November, according to the survey. It’s no wonder confidence in the market is so poor. The S&P/Case-Shiller index, reported Tuesday by Standard & Poor’s, revealed steep annual losses in home values across the U.S. in October. Home prices in 20 cities across the country  fell an average 18 percent from the year-ago data. Of the 20 metropolitan areas Standard & Poor’s studies, 14 showed record rates of annual decline. With consumers sitting on homes that are increasingly underwater, confidence in finding the bottom or any sort of market recovery appears to be drifting further down the river. Read the statement on the consumer confidence survey. Write to Diana Golobay at diana.golobay@housingwire.com.