NEW YORK – Consumer confidence hit an all-time low in December, dropping unexpectedly in the face of layoffs and deteriorating markets for housing, stocks and other investments.
The Conference Board's Consumer Confidence Index fell to 38 in December from a revised 44.7 in November. Economists surveyed by Thomson Reuters had expected the index to rise incrementally to 45.
The separate Present Situation index, which measures how respondents feel about business conditions and employment prospects, fell to 29.4 in December from 42.3 in November. It is now close to levels last seen after the 1990-1991 recession.
"Deepening job insecurity and falling asset prices are outweighing any optimism consumers may have derived from falling gas prices," said Dana Saporta, U.S. economist at investment bank Dresdner Kleinwort.
The unemployment rate hit a 15-year high of 6.7 percent in November and economists expect additional job losses in the first half of 2009.
In the Conference Board survey, those saying jobs are "hard to get" rose to 42 percent in December from 37.1 percent in November, while those claiming jobs are "plentiful" decreased to 6.2 percent from 8.7 percent.
The proportion of consumers anticipating an increase in their incomes decreased to 12.7 percent in December from 13.1 percent in November.
Those claiming business conditions are "bad" increased to 46.0 percent in December from 40.6 percent in November, while those saying business conditions are "good" declined to 7.7 percent from 10.1 percent.
The survey is based on a representative sample of 5,000 U.S. households. The cutoff date for December's preliminary results was Dec. 22.
Stocks rose in morning trading despite the reading, with the Dow Jones industrial average up 81.08 to 8,565.01, while broader indexes also gained. The stock market has seen its worst year since Herbert Hoover was president, with the Dow down roughly 36 percent.
The recession that began in late 2007 has deepened as companies have slashed jobs, curbed production and hoarded cash in the face of declining demand and frozen credit markets.
In 3M Co.'s quarterly update this month, Chairman and CEO George Buckley talked about how the company had closed 16 plants over the last year and a half, has been drawing down inventory and cutting capital spending.
"Is this healthy?" he said on the call. "All of us acknowledge we're collectively making the situation worse, but I think the first responsibility we have as leaders of companies is to make sure that we ensure the health and survival of our own companies first, not necessarily other people's companies, or, for that matter, the whole U.S. economy."