Forward Thinking Contrarians Take Note, an Improvement is Overdue, Market Bounce Predicted

NEW YORK (Dow Jones)--The perilous state of the U.S. economy sent U.S. consumer confidence levels to fresh depths in January. - The Conference Board reported Tuesday its January consumer confidence index fell to a historic low for the survey, at a reading of 37.7, from the revised 38.6 seen in December. Economists had expected a modest rebound, and had predicted the January index would come in at 39.0. - "It appears consumers have begun the New Year with the same degree of pessimism that they exhibited in the final months of 2008," said Lynn Franco, who leads the private research group's Consumer Research Center. "Consumers remain quite pessimistic about the state of the economy and about their earnings," she said, adding, "we can't say that the worst of times are behind us." - Consumer confidence measures are not terribly influential to Federal Reserve officials, who are meeting this week to deliberate on monetary policy in a gathering that's expected to bring no change from the central bank's current stance. - But even so, the funk consumers have been mired in is indicative of the economy's broader problems. - Rising unemployment, unending troubles on Wall Street, falling home prices, and a government response to the crisis that's been halting and thus far unclear in its impact, have all weighed on the nation's economic psyche. Worries are driving consumers to cut back on all sorts of spending, which in turn is deepening the recession and complicating efforts to engineer a recovery. - Steve Wood of Insight Economics noted that "confidence remains deeply mired in recessionary territory, resulting in big declines in real consumer spending." - The Conference Board found little that was positive in its survey of households. The present situation index for January fell to 29.9 from December's revised 30.2, while the expectations index declined to 43.0, from the prior month's 44.2. - In the report, consumers became more downbeat about the state of the economy, with those calling business conditions as bad rising to 47.9% of the survey from 45.8% in December, while those calling conditions "good" came in at 6.4%, from 7.7% the month before. - The Conference Board found a slightly more upbeat view on hiring, with those calling jobs "hard to get" moving down to 41.1% of respondents, from 41.5% in December. Those who deemed jobs as "plentiful" were 7.2% of the survey, from 6.5% who had that view a month ago. - The Conference Board's findings are based on a mail-in survey of 5,000 households. The cut off for responses was Jan. 21. - Some economists noted the report's findings about consumers' future plans for car purchases suggest better days may lie ahead for the very troubled auto sector. Abiel Reinhart of JPMorgan Chase told clients the Conference Board report and other data "provide some hope that vehicle sales could stabilize or improve in the months ahead." -By Michael S. Derby, Dow Jones Newswires; 201-938-4192; michael.derby@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=hZAZzwOP9uNFDVPLYpnI%2FA%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires January 27, 2009 11:44 ET (16:44 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 44 AM EST 01-27-09