NEW YORK - Consumer confidence sank this month to the lowest level in at least 41 years as Americans grew more concerned about the economy, keeping their jobs, and paying their mortgages.
The Conference Board's index of consumer confidence unexpectedly fell to 38, the lowest since records began in 1967, the New York-based private research group said yesterday.
The index was at 44.7 in November, and economists surveyed by Thomson Reuters had expected it to rise incrementally to 45. The index, which is based on a 1985 level of 100, was at 90.6 a year ago.
"Deepening job insecurity and falling asset prices are outweighing any optimism consumers may have derived from falling gas prices," said Dana Saporta, U.S. economist at investment bank Dresdner Kleinwort Ltd.
In the board's Middle Atlantic region - Pennsylvania, New Jersey and New York - confidence dropped to the lowest since the regional breakdown began in 1981. The December reading in the area was 30.2, down from 45.2 in November and from 72.5 a year ago.
But the regional index is heavily affected by New York's financial sector, which has been battered by a slump in housing, credit and stocks, said Lynn Franco, director of the Conference Board's consumer research center.
The index, based on a sample of 5,000 U.S. households, is a widely watched monthly business indicator because consumer spending makes up about two-thirds of U.S. economic activity.
Consumers have been nervous about spending for months - putting off big-ticket purchases, forgoing new clothes and choosing store brands at the grocery store - all of which may make this the worst holiday season for retailers in decades. December retail results will be reported next month.
The nation's unemployment rate hit a 15-year high in November, and economists expect additional job losses in the first half of 2009.
Economists had been counting on a plunge in gasoline prices since last summer to improve consumers' moods. But the decline in consumer confidence this month signals that spending will tumble further next year and prolong the year-old recession after a holiday shopping season that may have been the worst in four decades.
"The deterioration going on right now in the labor market made people feel much worse," said Nigel Gault, chief U.S. economist at IHS Global Insight Inc., of Lexington, Mass. "If people are worried about their jobs, they are not going to spend. That is extremely negative."
In the Conference Board survey, consumers saying jobs are "hard to get" rose to 42 percent in December from 37.1 percent in November.
Those claiming business conditions are "bad" increased to 46.0 percent in December from 40.6 percent in November.
The Conference Board's Present Situation Index, which measures how respondents feel about current conditions, fell to 29.4 from 42.3 in November. It is now close to levels last seen after the 1990-91 recession.