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.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast