Confidence in US Economy Down to Lowest Level Since March 2009

October 27 00:00 2011

New York, October 26 (RainbowNewsLine.com) – Americans say that their confidence level in the US economy is worse than they ever felt since the depths of the great recession. The continuous worries regarding unemployment and low wages have produced a negative sentiment that could not have come at a worse time than now when households are starting to make their holiday budgets.

The Conference Board, a private research group, said its index of consumer sentiment is at 39.8, which is six points lower than September and seven short of what analysts were expecting. This level of confidence is well above where it stood two and a half years ago at 26.9 but far below 90 that is the benchmark for the economy to be on a solid footing.

Consumer confidence level is a very important pointer towards how shoppers feel about business conditions, job market and the next six months. Economists watch this level carefully because consumer spending accounts for about 70% of U.S. economic activity.

Information regarding consumer confidence comes just two months before Christmas when consumer spending is highest. Twice as many people now expect a pay cut than those who expect a raise. Jacob Oubina, an economist at RBC Capital Markets said, “If people think their income is declining, they’re not going to be inclined to spend.”

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