More Signs of a Recession is about to Hit.......

Needless to say more, this is another indicator that a recession is about to happen.

Now, the Feds Chairman, Alan Greenspan, is warning investors about interest rates will keep going up - which means the Federal Reserve can feel that inflation is rising (especially with the current crude oil prices).

I will post that article later today.

Increasing interest rate will cost the U.S. government billions on debt servicing. Also, mortgage rates will go up as the prime rate goes up. The real estate bubble will burst (sounds like I am just repeating myself in the past month.......)

You know the rest if you have been following this blog in the past few weeks.
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U.S. consumer confidence drops

By ROMA LUCIW

Tuesday, September 27, 2005 Posted at 10:55 AM EDT

Globe and Mail Update

U.S. consumer confidence tumbled in September to its lowest level in almost two years, hurt by record high gasoline prices and the damage inflicted by hurricane Katrina.

The U.S. Conference Board said its index, which had rebounded in August to a revised 105.5, fell to 86.6, the lowest since 81.7 in October, 2003. Analysts had expected the index to decline to 95.

“Hurricane Katrina, coupled with soaring gasoline prices and a less optimistic job outlook, has pushed consumer confidence to its lowest level in nearly two years and created a degree of uncertainty and concern about the short-term future,” said Lynn Franco, director of the Conference Board's consumer research centre.

The price of crude and gasoline rocketed higher this month after Katrina, and most recently Rita, tore through the South-Eastern United States. Katrina damaged rigs and disrupted oil production in the Gulf of Mexico, and left hundreds dead and thousands homeless. The rise in energy bills have left Americans with less money to spend, and is threatening to curtail economic growth.

However, Ms. Franco said that historically, shocks such as those triggered by Katrina have had a short-term impact on consumer confidence.

“Fuel prices remain high, though they have retreated in recent days, and when combined with weaker jobs market outlook, will likely curb both confidence and spending for the short-term. As rebuilding efforts take hold and job growth gains momentum, consumers' confidence should rebound and return to more positive levels by year-end or by yearly 2006.”

The present situation index fell to 108.9 from 123.8, but the expectations index suffered the biggest drop, falling to 71.7 from 93.3.

Ian Shepherdson chief U.S. economist at High Frequency Economics, noted that the expectations index is at its lowest since March 2003, when the U.S. was waging war in Iraq.

“It is not clear there is anything in this survey that was not already apparent; the awful images of Katrina and its aftermath, together with the brief but huge spike in gas prices, depressed confidence substantially. The key question now is how quickly it recovers; we are hopeful the October numbers will show a partial rebound,” he said.

The Conference Board's assessment of the job market also turned pessimistic in September, with those expecting more jobs to become available in the near future dropping to 14 per cent from 16.4 per cent. The index of those expecting fewer jobs jumped to 25 per cent from 17.3 per cent in August.

The number of consumers saying business conditions are good fell to 25.2 per cent from 29.7 per cent, while those who said conditions are “bad” climbed to 17.7 per cent from 15.1 per cent. Furthermore, those anticipating business conditions will worsen rose to 19.8 per cent from 10.0 per cent.

The Conference Board is based on a survey of 5,000 households, conducted before Sept. 20.

Earlier this month, the University of Michigan's preliminary consumer sentiment index for September dropped to a 13-year low of 76.9, its biggest monthly drop on record.

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