Consumer Confidence Remains Wobbly but Layoff Fears Decline

(MoneyWatch) 

According to the BIGresearch monthly Executive Briefing consumer study, confidence in the economy remains historically low a year after the financial tumble that followed the collapse of Lehman Bros.

Consumers feel a little better than they did last October. This year, just over 30 percent said they felt confident or very confident about prospects for a strong economy versus 19 percent last October. That's also up about half a point from last month. However, numbers so low haven't been registered since October of 2002, when 26 percent of consumers were expressing confidence in the economy.

Of course, the Conference Board's consumer confidence rating fell to 53.1 in September, down from 54.5 in August. As expressed in the Present Situation Index, confidence decreased to 22.7 from 25.4 while the Expectations Index declined to 73.3 from 73.8.

As the holidays approach 49 percent of consumers say they've become more practical/realistic in their spending, down a point from September but only three points from October '08, which was the first BIGresearch post-banking crisis reading. Practicality will be the consumer byword over the next few months with 56 percent saying their priority is needs over wants. That's down two points from a year ago but a lot higher than in 2007, when 47 percent of consumers took that position.

What positives there were in the study came in the form of employment expectations. This month, 35 percent of consumers said they expect more layoff to occur over the next six months, which is a point less than September but 30 points down from October of 2008, when 64 percent were anticipating a pink slip deluge. Consumers also were less concerned about personal job security. Only five percent said they're worried about being laid off, down from eight percent last month and in this month last year, and in line with October '07.

How that translates into holiday prospects is hard to precisely gauge. According to the BIGresearch Diffusion Index, which compares consumers who say they will spend less and those who say they will spend more, all consumer product categories have improved from September of this year and from October 2008, but, compared to October '07, all have declined.

Compared to last month, purchase intentions gained for computers, jewelry, televisions and digital cameras, but compared to a year ago, the desire to purchase computers and digital camera remained flat while that for jewelry and TVs actually declined.