Consumer confidence recorded its steepest point drop in 15 years in September, as Americans grappled with the economic uncertainty wrought by hurricanes, soaring gas prices and rising interest rates.
The Conference Board said its consumer confidence index fell 18.9 points to 86.6 from a revised reading of 105.5 logged in August. That marked the largest one-month decline in the index since October 1990 and put the measure at its lowest level in two years.
Lynn Franco, director of the Conference Board's Consumer Research Center, attributed the decline to the effects of Hurricane Katrina, high prices at the pump and pessimism about the job market.
"Historically, shocks have had a short-term impact on consumer confidence, especially on consumers' expectations," Franco said in a statement. "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."
She did add that once "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."
The consumer confidence report follows a slew of disappointing earnings forecasts from major retailers for the second half of 2005, including
, the world's largest retailer.
Earlier this month, the University of Michigan reported that its consumer sentiment index plunged to a 13-year low of 76.9 in a preliminary reading for September from the 89.1 recorded for August. Economists on Wall Street were expecting a milder drop to 85.
"The key question now is how quickly
consumer confidence recovers," said Ian Shepherdson, chief U.S. economist with High Frequency Economics. "We are hopeful the October numbers will show a partial rebound."