Consumer confidence plunges amid heightened job anxiety

McClatchy NewspapersDecember 11, 2008 

WASHINGTON — Consumer confidence has dropped to near the all-time lows witnessed during this year's record energy prices, driven down anew by anxiety over job losses, according to a new poll of consumer attitudes released Thursday.

Consumer confidence, as measured by the Royal Bank of Canada's Cash Index, fell 19.4 points below November's score in a survey of 1,000 adults nationwide conducted Dec. 4-8. That's near the record lows of July at the height of the oil and gasoline price spikes.

Since then, oil and gasoline prices have plunged to lows not seen since the start of the decade, but that isn't boosting consumer confidence because one of the main drivers of confidence is employment. And the news about jobs is dismal.

The latest grim news came on Thursday, when the Labor Department reported that initial applications for jobless benefits rose to a seasonally adjusted 573,000 for the week ended Dec. 6, the highest level in 26 years. Fully 65 percent of Americans said they're less confident about their job security now than they were six months ago. And 50 percent said that either someone in their family or someone they know personally lost their jobs because of economic conditions in the past six months.

The RBC Cash Index, conducted by Ipsos Public Affairs, surveys consumer attitudes and spending by household. The survey had an error margin of plus or minus 3.1 percentage points. It includes sub-indices on employment, and the RBC Jobs Index for December 2008 fell 8.4 points to 65.6, compared with 74 in November.

"Since 2002, confidence in job security has traditionally been one of the most robust and resilient indicators of consumer confidence; however, during the course of 2008, attitudes regarding job security and job loss experience have softened substantially," the report said.

"Current results for December 2008 indicate that consumers are becoming increasingly more concerned about the job market. Personal job loss experience has increased along with worsening expectations of job losses and current job security."

The growing number of unemployed workers stokes worry about the future.

Another poll released Thursday — this one by the Pew Research Center for the People & the Press — found that 59 percent of Americans who say they're cutting back on financial purchases are doing so out of fear that their situation may grow worse. Only 29 percent said they're doing so because their finances had actually grown worse.

"With Americans continuing to render extremely bleak assessments of economic conditions, a psychology of bad times is becoming the mindset of the public," Pew researchers wrote. "This is spurring increasing numbers of consumers to say they are cutting back on everything from major purchases to eating out. No fewer than 73% say they plan to spend less on the holidays this year."

Pew talked to 1,489 adults in a random survey that carried a margin of error of plus or minus 3 percentage points.

Like the findings of the RBC Cash Index, Pew's survey found that falling gasoline prices to have done little to boost the mood of consumers.

"While Americans are finding food and fuel more affordable, this has done little to quell inflation concerns or to boost a positive economic outlook," the Pew report said.

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The Pew survey

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