New York - Despite a 14-point plunge in October's Consumer Confidence Index to the lowest level since November 1993, the number of households planning to purchase a TV or major appliance within the next six months has grown.
The index, which gauges the public's confidence in the health of the U.S. economy, and is based on a score of 100 for the year 1985, continued its four-month decline in October to stand at 79.4. The drop-off, which was the steepest month-to-month decline since the Sept. 11 terror attacks last year, sent the Dow Jones industrial average falling nearly 200 points in the hours following the announcement.
According to Lynn Franco, director of The Conference Board's Consumer Research Center, which produces the data, the confidence crisis reflects consumer concerns over the weak labor market, the threat of war with Iraq and the prolonged bear market. As a result, she said, 'The outlook for the holiday retail season is now fairly bleak. Without the likelihood of a pickup in consumer spending, an already weak economic recovery could weaken further.'
But despite the dismal outlook, the 5,000 U.S. households surveyed for the Confidence Index indicated a greater intention to buy TVs and white goods six months out. Indeed, some 7.1 percent of respondents said they plan to purchase a TV within six months, up from 6.6 percent in September and 6.8 percent in October 2001. Similarly, 4.1 percent plan to buy a washing machine in six months' time, up from 3.5 percent in September and 4.0 percent during the year ago period.
The survey supports the contention of some economists that consumer confidence doesn't necessarily correlate with consumer spending.