Consumer confidence falls to record low

The Conference Board reported a record low in consumer confidence in the U.S. going all the way back to 1967 when record-keeping began.

Falling home equity, plunging stock markets, and a credit crisis, the likes of which few have seen in their lifetimes, will tend to have that effect.

The consumer confidence index plunged by more than one-third, from 59.8 in September to 38.0 in October, a truly stunning fall that, according to Bloomberg, was the third biggest monthly decline on record, trailing only two plunges in the early 1970s linked to oil shocks.

From the peak of over 110 in July of last year, consumer confidence has plunged by almost two-thirds as shown below along with retail sales courtesy of Econoday.
It was the employment component of the report that took the biggest hit.

What used to be about equally weighted views of jobs being "hard to get" or "plentiful" has taken on a decidedly negative outlook in recent months - these two views were about equally weighted in the low 20s not more than a year ago:

Jobs readings point to big trouble for next week's monthly payroll report. Those saying jobs are currently plentiful fell nearly 4 percentage points to only 8.9 percent. Those saying they are hard to get spiked 5 points to 37.2 percent. These are very large month-to-month movements for these readings which make up a big piece of the current conditions component, a component that tracks very closely with the unemployment rate and is pointing squarely at a sharp rise from the current 6.1 percent.

In bad news for retail sales, only 4.4 percent of the sample say they expect to buy a car in the next six months, unusually low and down a steep 5 tenths against September which was a month of disaster for auto sales. In a sign that consumers are distressed, 12-month inflation expectations inexplicably jumped 7 tenths in the month to 6.9 percent. Perhaps consumers are judging inflation not by gas or food prices, which are coming down, but perhaps by money supply growth?

The rise in inflation expectations is very interesting, particularly since gasoline prices have been dropping like a rock.

Inflation expectations and prices at the pump have been highly correlated for years and it's hard to believe that consumers now view all the government rescue attempts as having a monstrous inflationary impact next year.

While many of us do hold that view, does the typical consumer?