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The Conference Board's Consumer Confidence Index declined for the fourth consecutive month in September. After a cumulative loss of almost 16 points from May to August, the composite CCI fell about another point during September. With this latest decline, consumer confidence appears to be bottoming out at its lowest level since November of last year.
With a September 2002 reading of 93.3 on the Conference Board's scale (on which average confidence during 1985 is equal to an index level of 100), the most recent composite CCI was a modest 3.8% lower than during September 2001 - but then that index had already plunged 15% below the August 2001 level, in the wake of the 9/11 terrorist attacks on New York and Washington.
The "Present Situation" subindex of the CCI fell by 4.6 points from August to September and was 29.4% below the reasonably confident (if only in resolved defiance of the terrorists) September 2001 index level. The "Expectations" (defined as six months into the future) component of the CCI, however, paints a much brighter picture - and provides a continuing hopeful sign that Americans believe that the worst of this downturn is behind us and that consumer spending will remain resilient, even in the face of future economic and geopolitical challenges. This subindex was up 1.0% from August to September. And compared with the dark days of September 2001, the "Expectations" component has shown remarkable improvement - evidence that American consumers remain confident that better days are ahead, but also still suggesting that the momentum of the economic recovery will be painfully slow to build. Consumer expectations - in indexed form, at least - this September were 23.6% more buoyant than they had been in September 2001.
Confidence indexes for six of the nine regions in the nation recorded increases from August to September of this year, despite the small decline in the national average. The East South Central region (encompassing Alabama, Mississippi, Tennessee and Kentucky) rose sharply for the second month in a row, recording a nation's-best 12.6% increase during September, on top of a 4.5% gain August. And confidence measures in the Middle Atlantic (+10.8%), West North Central (+9.3%) and Rocky Mountain (+8.1%) regions also rose sharply during the month. But all but two regions of the country - the East South Central (+7.5%) and the Middle Atlantic (+7.0%) - continued to record confidence measures this September that were lower than during the same month a year ago.
The part of the Conference Board's survey that measures actual buying plans (during the upcoming six months) of American households showed significant deterioration over the month. It's clear that the sluggish economic recovery and heightened concerns about a war with Iraq have caused consumers to "hunker down" and make plans to save more - at least in the short term. During August, 31.3% of households surveyed told interviewers they planned to buy at least one type of major appliance during the upcoming six months. In September, that number plunged to 25.8% - even lower than during the fall of 2001, in the wake of the terrorist attacks. Home buying plans dropped from a 4.5% share to a 3.3% share of households from August to September, with the sharpest decline in new home (vs. existing home) purchase intentions. And auto purchase intentions dipped to 6.8% during September, after reaching a high of 8.3% in July.
