Consumer Confidence Plunges Amid Rising Gas Prices and Housing Slowdown

Consumer confidence took a severe hit in September as Hurricane Katrina's devastation led to concerns about heating costs and gas prices, causing the biggest drop in 15 years. The decline in confidence raises questions about consumer spending for the holiday season, while new-home sales also plummeted in August, indicating a slowdown in the housing market. Federal Reserve Chairman Alan Greenspan warned that investors should not be complacent about the low interest rates, which may spell trouble for those relying on them for extended periods.

Key Takeaways:

• The Consumer Confidence Index dropped 18.9 points to 86.6 in September, the biggest slide since October 1990, marking the lowest level since October 2003.
• The index fell significantly as households became anxious about rising heating costs and filling gas tanks, with prices expected to remain at $3 per gallon.
• New-home sales dropped 9.9 percent to a seasonally adjusted annual rate of 1.24 million units in August, with the median sales price rising 2.5 percent to $220,300.
• Federal Reserve Chairman Alan Greenspan warned that low interest rates may be deceptive and may not last, potentially causing trouble for investors.
• The housing boom continues to show mixed signals, with new-home sales plummeting and the housing market possibly slowing down.

Statistics:

• The Consumer Confidence Index dropped 18.9 points to 86.6 in September, the lowest level since October 2003 (Associated Press).
• New-home sales fell 9.9 percent to a seasonally adjusted annual rate of 1.24 million units in August (Associated Press).
• The median sales price of new homes rose 2.5 percent to $220,300 in August (Associated Press).
• Gas prices are expected to remain at $3 per gallon, leading to consumer anxiety about heating costs and taking gas (Associated Press).

Sources:

• Associated Press
• Associated Press
• Associated Press