Consumer confidence in the US was on the receiving end of a big blow during October due to the insecurity over job prospects.
The Consumer Confidence Index (CCI) noticed that the Consumer Confidence fell dramatically and unexpectedly from 53.4 in September to 47.7 for October.
Analysts predicted that the Index would remain unchanged for October, or possible rise slightly.
Elsewhere, a major US index noted that house prices rose by more than predicted for August.
Not long after the release of the data, the US stock market saw the Dow Jones drop 24 points, or 0.2%, to 9843.93, thought to be a result of low consumer confidence.
According to the Conference board, consumer confidence received its biggest blow as a result of rising unemployment.
The US unemployment rate increased to a new 26-year high in September at 9.8%, as revealed in figures released at the start of the month.
Fresh doubts have risen over the retail industry’s upcoming strength during the Christmas holidays this year.
Lynn Franco, research director for the Conference Board, revealed that “consumers remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays.”
Approximately 70% of all US economic activity is due to consumer spending, so a lack of spending in the run up to Christmas may have major repercussions on the US economy.
In contrary to such worry news for the US economy, the US property market saw more positive news recently released.
There was a 1.2% rise in August in relation to July according to the Standard & Poor’s/Case Shiller Home Price Index, but 11.4% lower than last years figures.
Experts feel that the optimism may be short lived, as the recent increase in house prices may be a result of temporary tax credits.
Pierre Ellis of Decision Economics considers that “the picture so far is that prices have bottomed and are beginning to revive on a broad basis.”
“The question is whether it will be sustainable with a lack of employment growth and the potential expiration of the first-time home buyer credit.”
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