2008 record      

 

Consumer confidence plunged in early March amid soaring energy prices to the lowest since October 2008, according to the IBD/TIPP Economic Optimism Index released Tuesday.

The gauge dived 7.9 points, or 15.5%, to 43. It was the second-biggest drop since records began in 2001. Readings below 50 signal contraction. The six-month outlook crashed 13.3 points, or 25.1% to 39.7, the lowest since July 2008, when oil topped $147 a barrel.

Optimism had turned positive in January and February for the first time since 2009 as rising stock markets, a gradually improving labor market and better economic data fueled confidence. But growing Middle East unrest has sent oil and gasoline prices soaring in recent weeks, hitting consumers' pocketbooks.

"It's all driven by fear of events that are beyond our control," said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner. Still, "I don't think this is a signal for another recession" unless oil prices keep rising.

Higher oil prices filter down to a wide range of consumer goods such as food, gasoline and air travel, Mayur said, adding that consumers are already feeling the pinch from high unemployment.

"There are still 23% of households that have at least one person looking for full-time employment," he said.

U.S. crude fell 42 cents on Tuesday to $105.02 a barrel, but remains near 2 1/2-year highs amid ongoing and potential turmoil in the Mideast and North Africa.

p03082011Gasoline prices have jumped an average of 39 cents to $3.509 per gallon since Libya's protests began in mid-February, according to AAA, Wright Express and the Oil Price Information Service .

Two-thirds of respondents to the IBD/TIPP poll said that rising pump prices are hurting them financially, with 44% strongly agreeing. In all, 71% of those polled expect gas prices to top $4 a gallon in the next three months, with 24% predicting $5 or more.

The National Federation of Independent Business' small-business optimism index rose 0.4 point to 94.5 in February, before much of the recent spike in energy costs. Hiring and hiring plans improved, but just 9% net of small-business owners think the economy is improving.

The gauge of confidence in federal economic policies fell 4.5 points to 39. Separately, the IBD/TIPP Presidential Leadership Index fell 1.8 points from a nine-month high to 49.8.

The measure of how Americans feel about their finances in the next six months fell 5.9 points to 50.2, the lowest since August. All income groups felt less secure about their finances.

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