Best Financial Markets Analysis Article The Conference Board’s Consumer Confidence Index dropped 6.6 points to 39.8 in October. This reading is approaching the recession low of 25.3 recorded in February 2009. The Present Situation Index fell 7.0 points to 26.3, while the Expectations Index dropped to 48.7 from 55.1 in September. Essentially, the latest consumer confidence numbers are raising a red flag in an already weak economic environment.

The outlook of consumers has taken a big hit in the past six months (see Chart 2), with shaky financial markets, a weak housing market, and worrisome labor market playing an important role.

Survey respondents have become increasingly pessimistic about labor market conditions. The number of respondents indicating “jobs are hard to get” increased to 49.4% from 47.1% in September and the number indicating that “jobs are plentiful” declined to 3.4% from 5.6% in October. The net of these two indexes has a positive correlation with unemployment rate and it held nearly steady in October (43.7 vs. 43.8 in September). The implication is that an unchanged unemployment rate of 9.1% in October is entirely possible.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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