Confidence index is at an all-time low

Consumer confidence hit an all-time low this month, dropping in the face of rising layoffs, in yet another sign that consumer spending is unlikely to pull the U.S. out of a yearlong recession any time soon.

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.

The consumer confidence index measured by the Conference Board fell to 38 in December from a revised 44.7 in November, the private research group said Tuesday.

That is its lowest point since the Conference Board began compiling the index in 1967, and below the previous low of 38.8 in October. Economists surveyed by Thomson Reuters had expected the index to rise incrementally to 45.

“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.

The unemployment rate hit a 15-year high in November, and economists expect additional job losses in the first half of 2009.

Those saying in the Conference Board survey that jobs are hard to get rose to 42% in December from 37.1% in November, when the unemployment rate stood at 6.7%. Those saying that business conditions are bad increased to 46.0% in December from 40.6% in November.

Consumer spending is likely to keep dropping well into next year, Saporta said, meaning that the recession will last at least into the first half of 2009.

The Conference Board’s present situation index, which measures how respondents feel about current business conditions and employment prospects, fell to 29.4 in December from 42.3 in November.

It is now close to levels last seen after the 1990-91 recession.