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The conference board's Consumer Confidence survey Index took a huge hit this month, the first after Katrina.  In advance of today's announcement most watchers had anticipated a drop to a 95ish level, instead it dropped to 87 from 105.  The lowest level in the last two years.

Although not unexpected, the 17 point decline is larger than the hit after 9/11.

Additional bad news comes in the form of New Home Sales for August were down 9.9% and July's numbers were revised downward as well.  The Northeast and West Coast Markets were hit especially hard at 22% and 18% declines respectively.

More below.

From the Conference Board's statement.
"Hurricane Katrina, coupled with soaring gasoline prices and a less optimistic job outlook, has pushed consumer confidence to its lowest level in nearly two years (81.7 in October 2003) and created a degree of uncertainty and concern about the short-term future," says Lynn Franco, Director of The Conference Board Consumer Research Center. "Historically, shocks have had a short-term impact on consumer confidence, especially on consumers' expectations. Fuel prices remain high, though they have retreated in recent days, and when combined with a weaker job market outlook, will likely curb both confidence and spending for the short-run. As rebuilding efforts take hold and job growth gains momentum, consumers' confidence should rebound and return to more positive levels by year-end or early 2006."

A deeper look at the survey results brings up other not so positive news.  Job outlooks and future expectations also took hits. In general it was kind of a depressing report.

The concerns by many on dKos, high energy bills this winter, higher gas prices, uncertainty about the future seem to be reflected by the nation as a whole.  This will most likely lead to more conservative personal spending, which in turn will lead to more economic bad news.  It can be a self fufilling prophesy.  

The drop in new home sales is troubling as it is one the best performing sectors of the economy.

In addition to the nearly 10% drop in sales, inventories of houses started but not sold, have steadily been increasing through 2003 2004 and 2005.  At the current sales pace, there is nearly a 5 month supply on the market.  In all new homes and existing home sales are doing very well but showing signs of a decline.  September's numbers due next month will interesting as they will reflect the impact of higher fuel prices.

Originally posted to BTower on Tue Sep 27, 2005 at 10:19 AM PDT.

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Comment Preferences

  •  Biggest drop in 15 years. (4.00)
    It's the biggest consumer confidence decline since 1990.

    If the Republicans stay in power much longer, An Army of One isn't going to be just a slogan.

    Edwards/Clark 2008

    by MeanBoneII on Tue Sep 27, 2005 at 10:21:45 AM PDT

  •  We'll have to see how this plays out (none)
    Given the last month's events, this was bound to happen.  The real question is will it continue, or if it rebounds, how much does it rebound?

    "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

    by bonddad on Tue Sep 27, 2005 at 10:23:49 AM PDT

    •  Heating Bills (none)
      I think we are in for a couple of more hits as people get the first of the winter heating bills.  They'll be shocker. Plus, I'm araid all the news coming off the wires for the rest of the year will be negative.  
      •  Um, yeh (none)
        Excel was kind enough to forewarn folks, here in Colorado, that our bills would soar by 37% this winter. What, are they f-king kidding?! Thirty-seven percent... Kiss my Irish ass.

        Maybe, just maybe, we're not witnessing a dramatic fall in consumer confidence at all. Maybe we're witnessing a drastic rise in consumer disgust.

      •  Anybody have a link to a winter forecast? (none)
        As I recall it's not a strong el nino or la nina year so prediction might be dicey, but has anybody ventured a guess as to whether or not it will be cold or mild this winter in various parts of the US?

        In 2003/2004 (DC area) we had quite a few cold spells and I had natural gas bills over 300 in January and February.  In 2004/2005, I got aggressive with setting my programable thermostat and we had fewer really truly cold spells so my gas useage was lower, so my bills were lower.

        Well if we do get arctic air masses from Canada, at least I have flannel sheets, two down quilts and three warm furry shelties!

  •  Check msnbc.com (none)
    At least for now, the title for the link states "Consumer confidence dips".  Is this more bubbble greespan talk?  A suppose consumer confidence will eventually rebound and in the long term it could be called a dip, but a one month drop of 19 points is not a dip.

    The struggle against religious extremism begins at home.

    by cracklins on Tue Sep 27, 2005 at 10:29:21 AM PDT

  •  How many think we're already in recession? (none)
    I remember reading that the Leading Economic Indicators declined for the second straight month. That can't be good right?

    Guess the bad knews is why gold tanked today.  All I  know is that the "housing boom" in my neck of the woods is no more.  Some are saying it's just a seasonal downturn like happened last year but I can't help but think that this time is different and there will be no seasonal pickup come next March. Data point -- a longtime widowed neighbor of my parents sold her dutch colonial back in 2003 -- the buyers were looking to fix up and flip it would appear.  Originally the house sold for around 460,000 and is on the market now for 699,000. It's in move in condition with an upgraded kitchen and master bath but has sat on the market for over a month now.  A mansion around the corner from it was on the market for just under a million it went under contract and then popped back on the market where it sits but now over 100,000 cheaper asking price.

    •  2 states definitely in recession (none)
      I would imagine that the states of Mississipi and Louisiana are, by any definition, in a recession for a considerable time to come. The proof of the national economic pudding will be seen in the Xmas retail season figures though.

      I would also imagine that large parts of the Texan economy took a week-long productivity hit this month too.

    •  I 'm sure many areas (none)
      are in recession.  Most of the rust belt states are just holding on, themidwest is getting pummeled by high fuel prices and low commodity prices.  But K Street is doing well, so we should all feel great about the future.
    •  The clerk down at my local... (none)
      ....indie hardware store sez,

      "Recession is when the rest of the country looks like New Mexico."

      If that's true, the Country's stil OK because most of the rest of the country doesn't look like NM -- yet. But we're all tetering on the brink.

  •  University of Michigan's confidence index... (none)
    ...is at a 13-year-low.

    The numbers were described by an economist for FTN Financial as "abysmal."

    So, the conference board sees the biggest drop since 1990. Michigan's index is at its lowest since 1992. The economy gets Bushwhacked again.

    If the Republicans stay in power much longer, An Army of One isn't going to be just a slogan.

    Edwards/Clark 2008

    by MeanBoneII on Tue Sep 27, 2005 at 10:32:46 AM PDT

  •  I know why those numbers are falling... (4.00)
    Taxes on property went up, got a letter from health insurance company that monthly premium will increase next year and they are advising me to make sure I sign up for Bush's medicare plan (how much does that cost again?), and my car insurance went up as did my household insurance.

    My gas bill has gone way up, as has my food bill.  Some of these increases are 2-fold.

    My income -- well I live on a fixed income.  Do I have confidence in the future?  No not so much.  Especially when I read of bush now appointing some more republican wealthy donors to head up NPR.  The takeover of the "public broadcasting network" (public my right foot) is now complete.  Expect nothing more from them in helping us out of this mess.

    My only question left? Where are our heros going to come from.  And yes I know "first consult the mirror when you want action."  Everyone should do what they can and must do it.  But we need leaders and a voice on a national level.  Not hearing the voices?.. or is the media not covering it.  

    Low confidence is right.

    •  But wait (none)
      George bush has Mike Brown investigating the Federal Government's response to Katrina.  If that isn't true leadership, I'm a monkey's uncle.  
    •  The gas price hike is *HUGE*... (none)
      You don't know how many people live in the exurbs/rural and drive 20-40-60 miles to work every day one-way to work in the city.
      •  Yup, I do (none)
        My wife drives about 30 miles West, I drive 25 Miles East.  It sucks.
      •  In their @#*()%& SUVs (none)
        Today another SUV cut me off at a non-functioning traffic light.  Everyone with a license knows you're supposed to treat a broken traffic light as a stop sign, this f-tard just barreled thru making a left turn, accelerating as she came up the lane.  All the other cars are going 5, she was approaching 30.

        There is something about the SUV driver that screams selfish, ignorant, and and short-sighted.  Now they can pay $80 a tank to travel 200 miles.

        Moo ha ha ha ha ha.

        Seriously, here's a great essay on how SUV owners are the worst drivers on the road.

        Chaos, fear, dread. My work here is done.

        by madhaus on Tue Sep 27, 2005 at 10:48:24 AM PDT

        [ Parent ]

    •  You and my parents both! (none)
      I do worry more than a bit about the folks on fixed incomes who are the very folks who are vunerable to drafty cold houses.  I keep nagging my parents to get a programable thermostat but the one they had back in the 80s was a piece of junk so now they are convinced that all programmable thremostats are.
      •  Excellent Community Service Project (none)
        I "mentor" a couple of High School Robotics teams, right now we have them studying home energy savings ideas and assessmant techniques.  In partnership with a couple of area senior centers next month we're going to go out and do assesments and conservation projects for low income seniors with materials donated from local home center and hardware stores.  It's actually working well already, the kids are doing little projects in their own homes and nagging their parents.  Those are always the fun phone calls.
    •  Tuition (none)
      And on the other end, conservatives can accelerate their neglect of public universities into an outright hostility combined with pulling Federal tax dollars more and more from states. Affordable post-secondary public education - a thing of the past. Tuition will continue to skyrocket. They have priorities don't you know, time to drown the federal gov't in the bathtub.

      Rich Republicans can send their kids to private colleges while the fundamentalist kids will continue to send their kids to their religious schools.

      Kids, when your parents say, "Back in my day we did such and such in school...." - well at least there actually was a "day" when education was a priority and when elected official cared about making education accessible.

      Gov't drowned in a bathtub? Well, without an educated populace, will anyone even notice when the time comes.

      "If they can get you asking the wrong questions, they don't have to worry about the answers." - Pynchon

      by HairOnFire on Tue Sep 27, 2005 at 11:26:13 AM PDT

      [ Parent ]

      •  Absolutely agree (none)
        the younger generation just trying to get a start are getting hammered on all sides too.  Well, let's face it, the middle aged aren't doing too well either unless they are a Bush Pioneer.

        Higher education costs, less federal assistance, less "everyone get's a good education" support from the federal gov't ... we are back to if you have cash and lots of it life is great.  No cash, can hardly feed the family.

  •  Check out the video at msnbc.com (none)
    Home equity loan amounts have DOUBLED in the last 2 to 3 years. Greenspan says rising mortgage rates will undercut consumer spending. Home heating costs will undercut holiday spending. But the Fed has to continue raising rates to try to prevent inflation caused by energy and health costs.

    If the Republicans stay in power much longer, An Army of One isn't going to be just a slogan.

    Edwards/Clark 2008

    by MeanBoneII on Tue Sep 27, 2005 at 10:46:16 AM PDT

    •  Video? (none)
      That's a terrible way to get news unless you need to say pictures.  Certainly not the way to do financial news.

      You want numbers?  Here.

      San Diego has the highest rate of interest-only mortgages, at a gut-busting 47.3%!

      BusinessWeek Online has obtained the first-ever measurement by metro area of the increasing popularity of interest-only mortgages, and it shows that San Diego rates No. 1, by number of "IOs" in 2004. In metro San Diego, 47.3 percent of all mortgages required interest payments only in their early years. The survey covered the top 50 metro areas in the U.S. and measured by the total number of mortgages issued. Atlanta, San Francisco, Denver, and Oakland, Calif., followed close behind San Diego. Milwaukee, Wis., turned in the lowest number, just 4.8 percent interest-only loans last year.

      Look for those cities to have some serious problems with foreclosure.

      Chaos, fear, dread. My work here is done.

      by madhaus on Tue Sep 27, 2005 at 10:52:18 AM PDT

      [ Parent ]

      •  Yup, I know (none)
        My mom lives in Douglas County CO, the heart of CO's interest-only loans, I suspect. The area she lives in is awful chicken coops that replaced beautiful, wide open ranch land. I keep telling her it won't be long before she's living alone again.

        This is the way democracy ends Not with a bomb But with a gavel -Max Baucus

        by emptywheel on Tue Sep 27, 2005 at 11:02:23 AM PDT

        [ Parent ]

    •  Holiday spending indeed. (none)
      It's going to be a tough Christmas season for a lot of folks. That will add to the troubled economy. Small businesses likely to take the hardest hit.

      This is going to be a hard next 4, 5, maybe 10 years. I just hope all Americans know who to blame.

      "We got the force necessary to deal with the security situation." - George W. Bush, July 2, 2003

      by Pescadero Bill on Tue Sep 27, 2005 at 11:30:32 AM PDT

      [ Parent ]

      •  Yes, they should blame the guy they voted for. (none)
        I have little sympathy for them, they asked for it and now they are going to get it.  All of my predictions, while they labeled me a radical in need of counseling, are now coming true.
        •  I was just checking (none)
          to see if there was any reason for you to seek counseling and read your diary about the $ entering the economy for the soldiers (8/22/05).  You are totally insane and should be locked in a padded room. Just kidding.  Nice diary, I hadn't thought of that impact.  
          •  That was my first diary and thanks for the (none)
            comments!  I believe my sister-in-law, huge bush fan, said it best when she commented that I might need to see somebody for my cynicism towards the rethugs (she also told my wife to make it happen quickly as I was considered to be too radical).  Cannot wait to see her for x-mas, heh, heh!
  •  Who are these people... (none)
    That expected the tarket to be 95?  Shows ya that the 'experts' don't have a goddamn clue...

    "[A] 'Sharecropper's Society' [is] precisely where our trade policies, supported by Republicans and Democrats alike, are taking us." - Warren Buffet

    by RichM on Tue Sep 27, 2005 at 10:47:39 AM PDT

  •  Real estate sales are the clincher (none)
    When a real estate market turns down, the first thing that happen is that sales nosedive.  People hold out for their price and don't get it, so average time on market climbs.  Spec builders and flippers start to lower prices to get their short-term loans paid off, and the cascade begins.

    The plunge in new home sales in the Northeast and West Coast indicates that the bubbliest markets are going to crash first, and no doubt hardest.

    Jerome a Paris' diary yesterday contributed another vital clue:  Alan Greenspan's successor next year will have to make his bones as an inflation-fighter, especially with higher energy costs working into the economy.  Interest rates will rise, and the Wile E. Coyote real estate market will finally look down, initiating the plunge.

    We have cried wolf a long time.  But the howling is audible now.

    Now a New Mexican, and much the better for it.

    by Dallasdoc on Tue Sep 27, 2005 at 11:05:32 AM PDT

  •  I'm surprised the index is so high! (none)
    87?  My confidence is in the single digits.
  •  A Christmas with $3 gas (none)
    and similar outrageous prices for natural gas and heating oil will be a disaster for all retailers, from Wal-Mart to the mom-and-pop gift store.

    But what are consumers expected to do -- add another grand or so to their credit card debt? After their minimum payments are doubled in October? Not very likely.

    My gifts will be the same as last year -- affordable French wines and gift certificates to locally owned restaurants.

    Many people will do even less than that, and another Bush recession looms.

    The Republicans want to cut YOUR Social Security benefits.

    by devtob on Tue Sep 27, 2005 at 01:34:29 PM PDT

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