Business Times - 27 May 2008
WASHINGTON - US consumer confidence plunged to a 16-year low in May amid a stuttering economy and as surging oil prices pushed inflation expectations to an all-time high, The Conference Board reported on Tuesday.
The business research firm said its index of consumer confidence, which has slid all year, fell to 57.2 from 62.8 in April.
Most analysts expected a reading of 61.
The April reading of the consumer confidence index was revised slightly higher to 62.8, from an initial estimate of 62.3.
The index is seen as a gauge of future consumer spending, the driver of two-thirds of US economic activity. The last time the index was lower was in October 1992, when it stood at 54.6.
'Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy,' said Lynn Franco, director of The Conference Board consumer research centre.
'Consumers' inflation expectations, fuelled by increasing (petrol) prices at the pump, are now at an all-time high and are likely to rise further in the months ahead,' she said.
Both major components of the index dropped sharply in May. The present situation index, which measures how consumers feel about current conditions, fell to 74.4 from 81.9, a new low for the cycle.
The expectations index, which measures consumers' outlook for the next six months, fell to 45.7 from 50.0, also a low for the cycle.
The expectations index suggests 'little likelihood of a turnaround in the immediate months ahead', Ms Franco said. -- AFP
The business research firm said its index of consumer confidence, which has slid all year, fell to 57.2 from 62.8 in April.
Most analysts expected a reading of 61.
The April reading of the consumer confidence index was revised slightly higher to 62.8, from an initial estimate of 62.3.
The index is seen as a gauge of future consumer spending, the driver of two-thirds of US economic activity. The last time the index was lower was in October 1992, when it stood at 54.6.
'Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy,' said Lynn Franco, director of The Conference Board consumer research centre.
'Consumers' inflation expectations, fuelled by increasing (petrol) prices at the pump, are now at an all-time high and are likely to rise further in the months ahead,' she said.
Both major components of the index dropped sharply in May. The present situation index, which measures how consumers feel about current conditions, fell to 74.4 from 81.9, a new low for the cycle.
The expectations index, which measures consumers' outlook for the next six months, fell to 45.7 from 50.0, also a low for the cycle.
The expectations index suggests 'little likelihood of a turnaround in the immediate months ahead', Ms Franco said. -- AFP
