Consumer confidence declined sharply this month in the region comprising Pennsylvania, New York and New Jersey, according to the Conference Board report released yesterday.
The Mid-Atlantic region's outlook is notable because it is considered a reflection of how Wall Street itself views the nation's economic health.
Confidence this month in the Mid-Atlantic region dropped to 69.4 - its lowest level since September 2005, when Hurricane Katrina caused a spike in oil prices. The index for the region was as high as 99.1 in July, before problems in the subprime-mortgage industry became fully apparent. Only one other region - the South Atlantic, running from Delaware to Florida - scored a sharper decline in December consumer confidence.
Mid-Atlantic consumers, however, were the most pessimistic about the near future. They reported the lowest of all regions of the country on the Expectations Index, dropping to 54.0 in December compared with 75.5 nationally when asked how business conditions, employment, inflation, and the stock market would unfold in the next six months.
The three-state region's acute pessimism is largely the result of the high concentration of people employed in the financial-services industry in New York, Lynn Franco, director of the Conference Board Consumer Research Center, said in an interview.
"We've seen a lot of volatility in the stock market," Franco said. As investment banks and securities firms lose money, frontline workers on Wall Street become jittery about the future, affecting the regional numbers, she said.
"They're very pessimistic," Franco said.
All in all, she said, the latest numbers bear watching. "It's indicative of an economy that's losing momentum, not one that's gaining momentum."