Consumer Confidence Dives Off Cliff

New York — Consumer confidence plunged almost 18 percent in September, its biggest one-month drop in 15 years, The Conference Board reported, hammered by a punishing trifecta of Hurricane Katrina, rising gas prices and a weakening jobs outlook.

The widely watched gauge of consumer confidence — seen as a harbinger of future consumer spending, the main driver of the nation's economy — plummeted to a reading of 86.6, down from 105.5 in August.

“Hurricane Katrina, coupled with soaring gasoline prices and a less optimistic jobs outlook, has pushed consumer confidence to its lowest level in nearly two years,” since a reading of 81.7 in October 2003, said Lynn Franco, director of the business think tank's Consumer Research Center.

Confidence and spending are unlikely to rebound any time soon, said Franco. Consumers are quick to recover from events like recent hurricanes, she points out, but gas prices and a weakening jobs outlook could take an even greater toll.

“Historically, shocks have had a short-term impact on consumer confidence, especially on consumers' expectations. Fuel prices remain high, though they have retreated in recent days, and when combined with a weaker job market outlook, will likely curb both confidence and spending for the short-run. As rebuilding efforts take hold and job growth gains momentum, consumers' confidence should rebound and return to more positive levels by year end or early 2006.”