The October consumer confidence reading provided retailers with the opposite of comfort and joy leading into holiday.
The Conference Board’s Consumer Confidence Index hit an all-time low, plunging to 38 from 61.4 in September and 95.2 last October. The consensus among economists was 52.
The 23.4-point drop, the third largest in history, put the index at its lowest level since the Conference Board began tracking consumer sentiment in 1967. Both components of the index dropped this month, with the Present Situation index falling to 41.9 from 61.1 last month and, perhaps more ominously, the Expectations index plummeting to 35.5 from 61.5 in September.
“The impact of the financial crisis over the last several weeks has clearly taken a toll,” said Lynn Franco, director of The Conference Board Consumer Research Center.
Franco said the survey results suggest that the fourth quarter is off to a weaker start than the third quarter.
“A significantly larger proportion than last month foresees business and labor market conditions worsening,” she said. “Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season.”
The numbers, released Tuesday morning, briefly sent stocks lower before contributing to speculation about a greater-than-expected drop in interest rates when the Federal Reserve meets today. Propelled by that sentiment, bargain-hunting and strength in financing, Wall Street indexes surged.
Maury Harris, economist at UBS, said the “plunge in confidence” would play a role in shaping economic policy, stating that the Fed, initially expected to cut the funds rate by 25 basis points, is now anticipated to impose a reduction of 0.5 percent to 1 percent.
John Ryding, economist at RDQ Economics, said The Conference Board’s result “no doubt reflects the fears of a financial and equity market meltdown…the drop in the net reading on labor market conditions to the lowest level since October 1993 signals a significant deterioration in the job market.”
The percentage of consumers who said jobs are “hard to get” rose to 37.2 percent from 32.2 percent last month, while those who said jobs are “plentiful” fell to 8.9 percent from 12.6 percent. For the six-month expectations outlook, respondents who said they expect business conditions to worsen surged to 36.6 percent from 21 percent. Those who anticipate conditions will improve declined to 9.9 percent from 13.4 percent. Consumers also were pessimistic on the labor front, with those expecting fewer jobs in the months ahead rising to 41.5 percent from 26.9 percent.
“The layoff cycle will begin in earnest in January after firms assess their balance sheets and margin trends,” said Richard D. Hastings, consumer strategist at Global Hunter Securities. He said the consumer confidence reflects “capitulation, not by equities, but by consumers, and this ironically means the bottom, for equities, is not firming up anytime soon.”
However, Stephen Gallagher, economist at Société Générale, saw some hope in lower energy prices.
“The plunge in energy prices through the end of November suggests substantial price relief that will be supportive later in [the fourth quarter] and early 2009,” he said. “The overall picture may not be strength but, as shock dissipates, the increase in purchasing power should lead to a significant pickup in consumer activity.”
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)