It's hard to imagine U.S. consumers being upbeat these days, but the latest reading on consumer confidence is even worse than expected. The Conference Board's consumer confidence index fell to 38, a record low and down from a revised 61.4 in September. Economists had been expecting a reading of 52 this month.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said that this latest reading is consistent with consumer spending - once the engine of U.S. economic growth - plunging at an annualized rate of 3.5 per cent.
"But we think this will not happen, because the drop in stocks won't be repeated (we hope...) and the astonishing plunge in gas prices will lift sentiment, as it was before the market turmoil," Mr. Shepherdson said in a note. "Make no mistake, though, these numbers are extraordinarily awful."
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The reading came on the same day that the latest look at the U.S. housing market showed prices still in steep decline. The S&P Case-Shiller home price index for 20 markets fell 16.6 per cent in August, year over year. While that's a terrible decline, at least it was in line with expectations.
"With the inventory of unsold homes remaining well above level consistent with the historical norms, we expect price to continue falling until the glut of unsold homes is worked off," said Millan Mulraine, economics strategist at TD Securities, in a note.
The good news for investors is that the stock market appears to be taking these dismal numbers in stride. In mid-morning trading, the Dow Jones industrial average was up 2.5 per cent and the S&P/TSX composite index was up 3.2 per cent.
"Maybe the markets are learning to be efficient," said Jon Ogg, writing on the 24/7 Wall Street blog."Let's hope so, because economic numbers are likely not going to improve to any comfortable levels in the near future."