The outlook for the economy remains cloudy as the latest indicators from The Conference Board show a continued pessimism on the part of American consumers.
A Note to our Dealers
While the last two articles at Auto Credit Express have expressed a guarded optimism about the current state of the economy from SAGE and Cars.com, there are other surveys – most notably the one released yesterday by The Conference Board – that suggest most consumers continue to have a growing pessimism about their current situation and their expectations for a near-term recovery in the U.S. economy.
Confidence Lingers at Historic Lows
According to The Conference Board, its’ Consumer Confidence Index continued to drop from December’s reading of 38.6 to 37.7 (the Index in November read 44.7) and far below the level of 87.3, which was recorded in January of 2007.
Says Lynn Franco, Director of The Conference Board Consumer Research Center: "The Consumer Confidence Index(TM) continues to hover at all-time lows (Index began in 1967) and it appears that consumers have begun the New Year with the same degree of pessimism that they exhibited in the final months of 2008.”
The minor change in the Present Situation Index declined only slightly from 30.2 last month to 29.9 (this index stood at 42.3 in November). According to Franco this, “suggests that economic conditions did not deteriorate significantly further in January but, on the other hand, they did not improve either.”
A third index component, the Expectations Index, also showed a decline, albeit a small one, to 43.0 from the December figure of 44.2 (November stood at 46.2). What this means is that, according to Franco, “consumers remain quite pessimistic about the state of the economy and about their earnings. And, until we begin to see considerable improvements in the Expectations Index, we can't say that the worst of times are behind us."
The Bottom Line
Looking further into the report, there is little to suggest that consumers are ready to jump back into the car market in large numbers. Those that believe business conditions are “bad” increased to 47.9 percent from 45.8 percent month over month, while those that believe business conditions are “good” declined from 7.7 percent in December to 6.4 percent in January. Their short-term outlook also shows little improvement with those expecting business conditions to worsen decreasing only slightly from 32.9 percent to 31.1 percent while those who expect conditions to improve remained relatively unchanged at 13.3 percent (versus 13.4 percent in December).
On a more positive note, consumers’ assessment of the labor market appeared to be improving with those claiming that jobs are “hard to get” edging down from 41.5 percent in December to 41.1 percent this month. Those stating that jobs were “plentiful also increased slightly from 6.5 percent in December to 7.2 percent in the current survey.