Consumer Confidence Drops Sharply

[Doug]

Consumer comfort plummeted this week amid turbulence in the stock market and a seemingly infectious crisis in the home mortgage market.

The Washington Post-ABC News consumer comfort index (CCI), a barometer of the public's assessment of current economic conditions, plunged nine points this week, the biggest ever one-week drop since the poll started in late 1985.

The CCI now stands at -20 on its scale of --100 to +100, well off its high for the year, +2 in March, and near its post-Hurricane Katrina lows. After that storm devastated the Gulf Coast two years ago, consumer confidence quickly dropped by 11 points before recovering several months later.

The current fall has been even more precipitous. A month ago, easing gasoline prices helped lift the index to -5, 15 points higher than it is this week.

Although pump prices remain below the highs reached earlier this year, the stock market's recent ups and downs likely have rattled some nerves. In an April Gallup poll, about two-thirds of Americans said they have money invested in securities. The volatility's close link to the cooling housing market personalizes the crisis.

The AP reported today that the national foreclosure rate has nearly doubled over the past year. The CCI among homeowners is now lower than it has been at any point since November 2005.

Read the rest here.

[Barbara Fitzpatrick]

Well, the gummint has maxed out all its credit cards and is overdrawn at the bank, so there's not much the Fed can really do - except the two things it shouldn't (print more money or otherwise devalue the dollar and lower interest rates to encourage more borrowing). Considering Greenspan sold out in the late 1990s and the new guy seems to be following in his footsteps, those are the things they are going to do/are doing. Look to see the CCI get lower.