U.S. consumer confidence has plunged to its lowest level since 1993, according to a report released Tuesday by the New York-based Conference Board.
Consumer spending makes up approximately two-thirds of the $10 trillion U.S. economy, and has been practically the only driver of economic growth since last year's recession began.
The Consumer Confidence Index fell to 79.4 in October, down from 93.7 in September and the fifth monthly drop in the index, which is based on interviews with 5,000 households.
Lynn Franco is the Director of the Research Center at the Conference Board, the organization that compiles the Index. She says there are various reasons for the new lows. "We see quite a variety of factors contributing to this rather large loss that we've had in confidence, from weak labor market conditions, to the threat of military action in Iraq, to the general losses that we've had in the stock market," she said.
Ms. Franco acknowledges the news is especially grim considering the fact that the nation is heading into the November-December holiday season. Many U.S. retailers make the better part of their yearly profits during that period. But, she says, all hope is not lost.
"The outlook for the holiday retail season is rather bleak now. If we should happen to get a rebound in November, then perhaps the outlook will brighten somewhat," she said. This new dose of bad economic news is fueling the belief among experts that the Federal Reserve will cut rates next week.