Consumer confidence keeps plunging

  • Tuesday, October 30, 2001 9:00pm
  • Business

Associated Press

NEW YORK — Americans’ growing fears about anthrax and job security in the wake of the Sept. 11 terrorist attacks dragged down consumer confidence in October to its lowest level in 7 1/2years, suggesting the economy will take longer than anticipated to rebound.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index plunged to 85.5 from 97, well below the 96 reading analysts had predicted.

"We obviously expected consumer confidence to be shaken, but not this badly," said Oscar Gonzalez, an economist at John Hancock Financial Services in Boston. "This is a very worrisome report."

Stocks moved lower on the news. The Dow Jones industrial average closed down 148 points, or 1.6 percent, at 9,122, while the Nasdaq composite index ended 32 points, or 1.9 percent, lower at 1,667.

The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation’s economic activity.

The index compares results to its base year, 1985, when it stood at 100. The October figure is the lowest since February 1994.

Consumer spending has been one of the main factors preventing the economy from sliding into recession. But many economists now believe a recession is inevitable after the attacks on the World Trade Center and the Pentagon.

Companies have slashed hundreds of thousands of jobs since then. But they had already started trimming payrolls long before the attacks in response to an economic slowdown that weakened earnings and sent stock prices lower.

To help revive the economy, the Federal Reserve has cut interest rates nine times this year, with two reductions coming after the attacks. A 10th cut is expected when policymakers meet next month.

"Consumer spending has slowed over the past year, but overall it has held up reasonably well and it kept the economy afloat," Gonzalez said. "If jobs start disappearing at a rapid pace, we could see a sharper pullback in spending and a downward spiral that not even (Federal Reserve chairman Alan) Greenspan can stop."

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Lynnwood
New Jersey company acquires Lynnwood Land Rover dealership

Land Rover Seattle, now Land Rover Lynnwood, has been purchased by Holman, a 100-year-old company.

Szabella Psaztor is an Emerging Leader. (Olivia Vanni / The Herald)
Szabella Pasztor: Change begins at a grassroots level

As development director at Farmer Frog, Pasztor supports social justice, equity and community empowerment.

Owner and founder of Moe's Coffee in Arlington Kaitlyn Davis poses for a photo at the Everett Herald on March 22, 2024 in Everett, Washington. (Annie Barker / The Herald)
Kaitlyn Davis: Bringing economic vitality to Arlington

More than just coffee, Davis has created community gathering spaces where all can feel welcome.

Simreet Dhaliwal is an Emerging Leader. (Olivia Vanni / The Herald)
Simreet Dhaliwal: A deep-seated commitment to justice

The Snohomish County tourism and economic specialist is determined to steer change and make a meaningful impact.

Emerging Leader John Michael Graves. (Ryan Berry / The Herald)
John Michael Graves: Champion for diversity and inclusion

Graves leads training sessions on Israel, Jewish history and the Holocaust and identifying antisemitic hate crimes.

Gracelynn Shibayama, the events coordinator at the Edmonds Center for the Arts, is an Emerging Leader. (Olivia Vanni / The Herald)
Gracelynn Shibayama: Connecting people through the arts and culture

The Edmonds Center for the Arts coordinator strives to create a more connected and empathetic community.

Eric Jimenez, a supervisor at Cocoon House, is an Emerging Leader. (Olivia Vanni / The Herald)
Eric Jimenez: Team player and advocate for youth

As an advocate for the Latino community, sharing and preserving its traditions is central to Jimenez’ identity.

Nathanael Engen, founder of Black Forest Mushrooms, an Everett gourmet mushroom growing operation is an Emerging Leader. (Olivia Vanni / The Herald)
Nathanael Engen: Growing and sharing gourmet mushrooms

More than just providing nutritious food, the owner of Black Forest Mushrooms aims to uplift and educate the community.

Molbak's Garden + Home in Woodinville, Washington closed on Jan. 28 2024. (Photo courtesy of Molbak's)
Molbak’s, former Woodinville garden store, hopes for a comeback

Molbak’s wants to create a “hub” for retailers and community groups at its former Woodinville store. But first it must raise $2.5 million.

DJ Lockwood, a Unit Director at the Arlington Boys & Girls Club, is an Emerging Leader. (Olivia Vanni / The Herald)
DJ Lockwood: Helping the community care for its kids

As director of the Arlington Boys & Girls Club, Lockwood has extended the club’s programs to more locations and more kids.

Alex Tadio, the admissions director at WSU Everett, is an Emerging Leader. (Olivia Vanni / The Herald)
Alex Tadio: A passion for education and equality

As admissions director at WSU Everett, he hopes to give more local students the chance to attend college.

Dr. Baljinder Gill and Lavleen Samra-Gill are the recipients of a new Emerging Business award. Together they run Symmetria Integrative Medical. (Olivia Vanni / The Herald)
Emerging Business: The new category honors Symmetria Integrative Medical

Run by a husband and wife team, the chiropractic and rehabilitation clinic has locations in Arlington, Marysville and Lake Stevens.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.