Layoffs, plunging home prices and tumbling investments have pushed consumer pessimism to record levels in October, a private research group said Tuesday. Wall Street shook it off, though, focusing instead on higher global markets amid optimism the Federal Reserve will ease interest rates further.
By CHRISTOPHER S. RUGABER, AP Economics Writer
The Conference Board said the consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts’ expectations of 52.
That’s the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop. A year ago, the index stood at 95.2.
Wall Street, which has come to expect bad news on the economy, took the report in stride. The Dow gave up some of its early gains but was still up about 2 percent in midday trading, while the broader S&P 500 index rose 1.7 percent.
Investors are expecting the Federal Reserve to cut its target interest rate Wednesday by up to one-half a percentage point to 1 percent after its two-day meeting that began Tuesday.
In addition, European and Asian financial markets were up significantly Tuesday on expectations of the cut.
The news was not good for Main Street, though.
“Consumers are extremely pessimistic,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “This news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season.”
Separately, a closely watched index of home prices fell by its steepest ever annual rate in August.