Consumer Confidence at All-Time Low

The January plunge in consumer confidence to touch an all-time low of 37.7 sparked a rally for the USD in online trading, although GFT Director of Currency Research Kathy Lien called the trend a “reflection of more panic selling and not optimism about US economy.” She cautioned that confidence may not be restored until job security is no longer an issue—but with unemployment spiking to 7.2% and most analysts predicting that recovery will not be possible until 2010 at the very earliest, increased consumer confidence may be very far off indeed. In the meantime, any dollar gains in online forex trading are expected to be ultimately insubstantial.

Given the dreary consumer outlook, it’s not surprising that fourth-quarter GDP also fell to the weakest level in 26 years and house prices dove another 18.18% in November for the largest recorded decline. The sole bright spot, according to Lien, is the projected increase in car sales in the next six months as consumers look to capitalize on the discounts being offered to move inventory.