Consumer Confidence Plunges

According to the University of Michigan's September 2005 survey, consumer confidence plunged in September to its lowest level in more than a dozen years. “High gas prices had a devastating impact on consumers’ budgets and caused consumers to expect a worsening financial situation during the year ahead,” according to Richard Curtin, the Director of the University of Michigan’s Surveys of Consumers. Over the past fifty years, such steep and widespread declines in confidence have typically triggered recessions. Vehicle and home buying attitudes fell to ten-year lows in September. The decline in vehicle buying plans was due to heightened uncertainty about future gas prices, cited by the largest proportion of consumers since the 1979 surge in gas prices, which overwhelmed the appeal of price discounts. The decline in home buying plans was due to an increasingly negative reaction to high home prices, as consumers expressed in September the least favorable assessment in nearly a quarter century.