February 24, 2009
Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars.
The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today. Another report showed the drop in home values accelerated in December.
Retailers such as Macy’s Inc. and J.C. Penney Co. are likely to keep hurting as foreclosures soar and job losses mount. President Barack Obama is trying to mend the breach in confidence with a stimulus plan that he says will save or create more than three million jobs, while Federal Reserve Chairman Ben S. Bernanke today said the economy is in a “severe” contraction.
“Just when you think confidence can’t go any lower, the bottom falls out of it, and you can be sure the rest of the economy is not far behind,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, which had the closest forecast at 26.7. “If consumers’ spending matches their flagging spirits, this recession is going longer and deeper.”
Economists forecast confidence would fall to 35, from a previously reported 37.7 for January, according to the median of 72 projections in a Bloomberg News survey. Estimates ranged from 26.7 to 42.