Consumer Confidence in U.S. Probably Held Near Record Low

By Courtney Schlisserman

Jan. 27 (Bloomberg) -- Confidence among consumers probably held near a record low in January as a growing number of Americans lost their jobs and houses, an industry report may show.
The Conference Board’s sentiment index climbed to 39 this month from a December reading of 38 that was the lowest since records began in 1967, according to the median forecast of 69 economists surveyed by Bloomberg News. A separate report today may show the drop in home values accelerated in November.
Caterpillar Inc. and Home Depot Inc. were among companies yesterday that said they will cut at least 74,000 workers from payrolls in coming months as sales drop and the recession deepens. President Barack Obama is trying to drum up support for quick passage of a stimulus plan that aims to create jobs, cut taxes and boost infrastructure spending.

“We expect consumer confidence will remain depressed for the foreseeable future, putting considerable downward pressure on economic growth,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina.
The New York-based Conference Board’s report is due at 10 a.m. Forecasts in the Bloomberg survey ranged from 35 to 45. A 39 reading would be the third-lowest on record.
At 9 a.m., a report from S&P/Case-Shiller may show home prices in 20 major metropolitan areas declined 18.4 percent in the 12 months ended in November, the largest drop since record- keeping began in 2001, according to the Bloomberg survey.

Obama’s Plan 

Obama’s administration will direct more of the second half of a $700 billion financial rescue plan to open up credit for consumers and businesses and stem home foreclosures, his spokesman said yesterday. The president has asked his economic advisers for recommendations “specifically addressing home foreclosures, addressing financial stability in banks,” White House Press Secretary Robert Gibbs said in a briefing.
Meanwhile, lawmakers are debating an $825 billion package of tax cuts and new federal spending that the president hopes will be passed by the middle of next month.

The U.S. recession, which began in December 2007, has so far cost 2.6 million jobs and is already the longest in a quarter century. Wachovia’s Silvia projects the jobless rate will climb to 9.5 percent by the end of 2010, the highest level since 1983. The rate was at 7.2 percent last month.
The world’s largest economy probably contracted at a 5.5 percent annual pace from October through December, the biggest drop since 1982, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures due Jan. 30.

Spending Slump 

Consumer spending, the largest part of the economy, is forecast to have dropped at a 3.5 percent pace last quarter after slumping at a 3.8 percent rate the previous three months. It would be the first time purchases declined more than 3 percent in consecutive quarters since records began in 1947.
“We are in the midst of a global economic crisis,” Wal-Mart Stores Inc.’s vice chairman and future chief executive officer, Mike Duke, told employees of the world’s largest retailer yesterday. Bentonville, Arkansas-based Wal-Mart said this month that fourth-quarter profit will miss its forecast and predicted revenue in January will be little changed.

Fourth-quarter profit at Harley-Davidson Inc., the biggest U.S. motorcycle maker, dropped 58 percent and the company said Jan. 23 it plans to cut 1,100 jobs and close three facilities. The company declined to project earnings for this year and said it’s reducing shipments by as much as 13 percent to prevent excess inventory.

“We are certainly not immune to the current economic conditions,” Chief Executive Officer Jim Ziemer said in a conference call Jan. 23.

Bloomberg Survey

=============================================
                         Case Shil Consumer
                           Monthly     Conf
                              YOY%    Index
=============================================

Date of Release              01/27    01/27
Observation Period            Nov.     Jan.
---------------------------------------------
Median                      -18.4%     39.0
Average                     -18.4%     38.9
High Forecast               -17.4%     45.0
Low Forecast                -20.0%     35.0
Number of Participants          27       69
Previous                    -18.0%     38.0
---------------------------------------------
4CAST Ltd.                  -18.4%     41.0
Action Economics            -19.7%     40.0
AIG Investments             -17.7%     36.0
Aletti Gestielle SGR          ---      39.5
Ameriprise Financial Inc      ---      39.0
Argus Research Corp.          ---      45.0
Banc of America Securitie     ---      37.0
Bank of Tokyo- Mitsubishi     ---      40.6
Bantleon Bank AG              ---      40.0
Barclays Capital            -18.4%     39.0
BMO Capital Markets         -18.7%     36.0
BNP Paribas                   ---      40.0
Briefing.com                  ---      39.0
Calyon                        ---      39.0
Castlestone Management LT     ---      43.0
Citi                          ---      38.0
ClearView Economics         -18.3%     ---
Commerzbank AG              -18.4%     39.0
Credit Suisse                 ---      35.0
Daiwa Securities America      ---      38.0
DekaBank                      ---      37.0
Desjardins Group            -17.4%     40.5
Deutsche Bank Securities      ---      37.0
Deutsche Postbank AG          ---      39.1
Dresdner Kleinwort          -18.5%     41.0
DZ Bank                     -18.0%     38.0
First Trust Advisors          ---      38.2
Fortis                      -17.9%     38.0
Goldman, Sachs & Co.          ---      42.0
Helaba                        ---      38.0
Herrmann Forecasting          ---      37.5
High Frequency Economics    -18.2%     40.0
HSBC Markets                -18.0%     39.0
IDEAglobal                  -18.1%     40.0
IHS Global Insight            ---      35.0
Informa Global Markets        ---      39.5
ING Financial Markets       -18.7%     37.0
Insight Economics             ---      35.0
Intesa-SanPaulo               ---      40.0
J.P. Morgan Chase           -18.7%     38.0
Janney Montgomery Scott L   -18.6%     40.5
Landesbank Berlin             ---      35.0
Landesbank BW               -18.5%     36.0
Maria Fiorini Ramirez Inc     ---      40.0
Merrill Lynch               -18.0%     35.0
MFC Global Investment Man     ---      37.0
Moody’s Economy.com           ---      40.0
Morgan Stanley & Co.          ---      38.0
National City Bank            ---      40.2
Natixis                     -18.9%     39.0
Newedge                       ---      39.5
Nord/LB                       ---      41.0
Raymond James                 ---      37.0
RBS Greenwich Capital         ---      40.0
Ried, Thunberg & Co.          ---      40.0
Schneider Foreign Exchang     ---      41.0
Scotia Capital              -18.8%     36.0
Societe Generale              ---      40.0
Standard Chartered          -18.5%     38.0
Stone & McCarthy Research     ---      38.7
TD Securities               -18.5%     38.0
Thomson Financial/IFR         ---      41.0
UBS Securities LLC          -18.7%     39.5
Unicredit MIB               -20.0%     35.0
University of Maryland      -18.0%     38.0
Wachovia Corp.                ---      41.0
Wells Fargo & Co.             ---      40.0
WestLB AG                   -18.2%     40.0
Westpac Banking Co.           ---      42.0
Wrightson Associates          ---      42.0
=============================================

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
Last Updated: January 27, 2009 00:01 EST