Consumer confidence bodes poorly for holiday shopping season

By David Sedore, Palm Beach Business.com

DELRAY BEACH — Consumer confidence fell hard nationally in October, while holding steady in Florida.

The Conference Board Consumer Confidence Index fell to 47.7 from a September reading of 53.4, as consumers’ opinion of the current economy declined to its lowest point in 26 years. Expectations for the future fell sharply as well.

In Florida, the University of Florida’s consumer confidence index held at 72, same as the revised number for September. The number is 9 points higher than a year ago and is at the high point for the year.

Both reports do not bode well for retailers during the upcoming holiday season.

"Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment,” Lynn Franco, director of the Conference Board’s consumer research center. “In fact, the index is now at its lowest reading in 26 years (Index 17.5, Feb. 1983). The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead.

“Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."

In Florida, consumers are more optimistic about their personal finances and less optimistic about the national economy, according to Chris McCarty, director of the UF survey.

“They remain bullish on buying opportunities, and are likely to be even more optimistic when they see the drastically lower prices from retailers in the coming months as they try to boost holiday sales among the most cautious U.S. consumer since the Great Depression,” McCarty said.

On the other hand, unemployment sits at 11 percent statewide, higher in many parts of Florida, including Palm Beach County and retail sales remain low, McCarty said. It all adds up to a holiday season about the same as last year’s poor numbers.

And the combination of poor sales and high unemployment are likely to add up to more bad news in 2010, McCarty said.