Consumer confidence hits 41-year low

Confident and consumer are two words that just don't belong together these days.

Research released by a private group today, and interviews with people taking a break at Center City's Liberty Place this week, bear out the deep concern people are feeling about their money.

The Conference Board said today that consumer confidence plunged in October to its lowest level since the measuring started in 1967, as layoffs and falling stock and home prices gave consumers plenty to worry about.

The New York business-research group said its Consumer Confidence Index fell to 38.0 from a revised 61.4 in September and was significantly below analysts' expectations of 52. The index is based on a level of 100 in 1985.

People in the Mid-Atlantic states - defined as Pennsylvania, New Jersey and New York - were among the nation's gloomiest, with an index of 33.5. But the region's numbers are typically affected heavily by the stock market, which has fallen sharply in the last two months.

"Consumers are extremely pessimistic," said Lynn Franco, director of the Conference Board's Consumer Research Center. "This news does not bode well for retailers, who are already bracing for what is shaping up to be a very challenging holiday season."

Among people taking a break from work at Liberty Place, there was some recognition that now might be a good time to buy - both stocks and stuff - but they mostly planned to hold on to their money. They did not see that changing anytime soon.

Even those who have been told their jobs are safe were worried and distrustful. They said they were cutting back on Christmas and spending less for food and entertainment.

Joanne Morrison, 57, of Philadelphia, has made one exception: her grandchildren. She has two, and one more on the way. "I do spend for that," she said, "but all sale stuff."

She has been told not to worry about her job in hospital purchasing - and she has heard experts on TV tell her not to panic. "I think it's easier said than done," she said. "It's in the back of your head - what's going to happen?"

She said she thought it would be a year before things improved.

Tiffany Hood of Cherry Hill and Emie Gentile of Philadelphia are in their 20s and work in human resources for a law firm that is actually hiring. But they do not expect a quick economic turnaround.

"It's still got to bottom out," Gentile said. "I think it'll be a long time before the economy comes even close to recovering."

The confidence index is widely watched because consumer spending makes up about 70 percent of U.S. economic activity. A year ago, the index stood at 95.2.

The 23.4-point drop this month from September is the steepest since a 36.9-point fall from October 1973 to December 1973, when the economy was in a severe recession. The index then was measured every two months.

Consumers do not expect a quick fix. The percentage who think business conditions will worsen over the next six months rose to 36.6 from 21, the Conference Board said.

Charles Waters, a portfolio manager at a leasing and commercial-finance company, who was lunching with coworkers at Liberty Place, said he thought the economy would pick up if consumer confidence did, and he said he thought people on Wall Street know how to turn things around.

"Right now, the people in the know are buying real cheap," his fellow portfolio manager, Jamar Flanagan, chimed in.

Waters got a good deal on a new car recently. But Flanagan isn't going out as much and foresees two to three years before things get better.

He said he thought people might feel more optimistic after the election. "That will be sort of a fool's gold sort of thing," he said. "People will feel upbeat about whatever change they think is going to happen."