- The Washington Times - Tuesday, February 24, 2009

Consumer confidence plummeted in February to its lowest level ever recorded as more than half a million people lose their jobs every month and millions of others have had their pay cut or their working hours reduced.

The Conference Board, a New York-based organization that monitors the nation’s leading economic indicators, said in its monthly report that its Consumer Confidence Index declined in February to 25, down from 37.4 in January and its lowest level since the index began in 1967.

Its Present Situation Index declined to 21.2 from 29.7 in January, and its Expectations Index plunged to 27.5 from 42.5 in January.

The precipitous drop in consumer confidence comes in an atmosphere of declining sales in everything from automobiles to appliances, from houses to clothing, that plunged the nation into its worst economic situation and financial crisis since the Great Depression of more than 70 years ago.

The official unemployment rate is 7.6 percent and expected to go higher as more than half a million people have been losing their jobs in each of the last four consecutive months. Investors, including everyone from workers with 401(k) accounts to retirees, have lost hundreds of millions of dollars in the collapsed stock market.

The federal government has been forced to pump hundreds of billions of dollars into the economy to save banks that some economists believe are insolvent, to try to save or create 3.5 million jobs and to prevent homeowners from going into foreclosure in a crisis that exploded with the burst of the housing bubble and a resulting Wall Street meltdown.

And consumers see no improvement for the next six months.

“This is the groundhog who can’t see his shadow,” Ken Goldstein, a Conference Board economist, told The Washington Times.

As if to confirm the dismal report, some of the biggest names in American retailing, such as Home Depot Inc., Macy’s Inc. and Target, reported depressed earnings in the three months ended Jan. 31.

Macy’s alone said its earnings dropped nearly 59 percent to $310 million, or 73 cents a share, compared with $750 million, or $1.73 a share, for the similar period a year earlier.

“The decline in the Present Situation Index, driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter,” the Conference Board said.

“Looking ahead, increasing concerns about business conditions, employment and earnings have sapped confidence and driven expectations to their lowest level ever,” it said. “In addition, inflation expectations, which had been easing over the past several months, have moderately picked up.

“All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months.”

Mr. Goldstein, the economist, said it would be necessary to return to the recession of 1981-82, when Ronald Reagan became president, to find such a sustained level of low consumer confidence.

“You’ve got scared consumers, and scared consumers are not going to go out shopping in droves,” he said.

“Not only is the economy so weak, but there’s a danger of it imploding,” he said, unless federal plans to help the banks and stimulate the economy begin working.

Federal Reserve Chairman Ben S. Bernanke virtually echoed Mr. Goldstein’s thinking.

In testimony before the Senate Banking Committee just after the Conference Board report was released, Mr. Bernanke said that there is “a reasonable prospect” the recession will end this year “if actions taken by the administration, Congress and the Federal Reserve are successful in restoring some measure of financial stability.”

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