Today we learned that if the American consumer was wearing a mood ring, the color of the stone would be very dark. The Conference Board's index of consumer confidence took an unexpected plunge this month, descending to a level not seen since the depths of the recession in spring 2009.
The index dropped from 46.4 in September to 39.8 this month. Economists surveyed by Dow Jones expected the index to fall slightly to 46.0.
We spoke with Conference Board economist Ken Goldstein. He says that two years after the official end of the recession, the economic situation isn't getting worse, but consumers see that, A) Things haven't gotten better; B) Things aren't getting better; and C) That they have little reason to hope that things will start getting better in the next few months.
Goldstein says this development bodes very badly for the coming holiday season, though other indicators seem to tell us that the holidays could be more lucrative for retailers than last year. Just yesterday, FedEx said it expected record shipments between Thanksgiving and Christmas.
Goldstein says today's confidence numbers are driven by a lack of job growth and wage growth. He says that consumers are still getting out of debt so they're saving more, not spending more. He says that this fits into the pattern of an economy that the economy isn't taking off. Consumers are waiting for businesses to hire, but businesses are waiting for consumers to start spending before they hire new workers.
Who should be worried about this? Well, any politician up for reelection next year has to sweating at least a little bit after seeing these numbers.
Also on today's show, Netflix stock is dropping dramatically. This after the company confirmed that more customers than expected have bailed from the DVD and online movie streaming service. A price increase and a now-canceled scheme to chop the company in two have alienated hundreds of thousands of customers.
News that consumers may need their cash for something other than watching movies at home slows the Marketplace Daily Pulse today.