Consumer confidence plummeted in September to its lowest reading since October 2005, fueling worries that housing’s downturn could affect consumer spending, which makes up two-thirds of the economy. Home prices, meanwhile, suffered their biggest drop in at least 6 years. “There is really no positive news in today's report,” an economist told Bloomberg.
The unexpectedly steep drop in consumer confidence reflects "a quite profound confidence deterioration under way," another expert told Reuters. “This is really the number-one risk: a sustained, sharp decrease in home prices really squeezing consumers,” said an economist. Housing prices dropped 4.4% for the year and look poised to keep falling, all of which makes a Fed rate cut tomorrow more likely.