NEW YORK (AdAge.com) -- Consumer confidence hit new lows in February, signaling that spending will continue to sink, further squeezing already-struggling retailers.
The Conference Board's Consumer Confidence Index plummeted 12 points to 25, the lowest level since tracking began in 1967. Last year at this time, the index stood at 76. The decline was much steeper than expected, with economists having predicted the index would hit 35 this month. The index is based on survey of 5,000 consumers and its benchmark is 100.
The Conference Board is an independent research group.
Six-month outlook pessimistic
Dismal news across the housing and auto sectors, as well as rising unemployment rates and the plunging stock market, conspired to send consumers into a funk that's not likely to lift anytime soon. The Conference Board's six-month outlook is pessimistic.
"Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever," said Lynn Franco, director of the Conference Board's consumer-research center. "In addition, inflation expectations, which had been easing over the past several months, have moderately picked up. All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months."
A host of major retailers have begun reporting gloomy fourth-quarter results and are striking exceedingly cautious notes. Last week, JCPenney forecast its first quarterly loss in nearly five years. Nordstrom, which reported earnings yesterday, said it would stop providing quarterly earnings estimates.
Tough fourth quarter for retailers
"As the economy has weakened and become more unpredictable, our ability to accurately project near-term results has become more difficult," Michael Koppel, Nordstrom's chief financial officer, said during a conference call with analysts.
Nordstrom reported a 68% dive in fourth-quarter profits, while sales at stores open at least a year dropped 13%.
Today, Macy's, Target and Home Depot also reported difficult fourth quarters. Target saw profits decline 41%, on a 6% same-store sales drop. Macy's fourth-quarter profit dropped 59%, while same-store sales dropped 7%.
Home Depot, meanwhile, which has been hit by the housing-market woes and declines in consumer spending, reported a $54 million loss during the period. The retailer took a hit as a result of its plans to shutter its smaller nameplates, including Expo Design Centers.
Across the board, retailers said consumers are being cautious and spending primarily on necessities.
"The customer is very tentative," Mike Ullman, JCPenney CEO, said during a call with analysts. "They are buying what they need, and they are being smart about how they spend their money."