Fear of war, a weak perception of the economy and diminished wealth pushed consumer confidence numbers down to 10-year lows last month, according to two leading surveys released this week.

For the month of October, the University’s Index of Consumer Sentiment fell 5.5 points to 80.6, showing its fifth monthly decline. The Conference Board’s Consumer Confidence Index dropped to 79.4, down from 93.7 in September, well below Wall Street expectations of 90.0. For both surveys, these are the lowest levels seen since 1993.

“The decline was not unexpected, but the number was a bit more than I had anticipated,” said Richard Curtin, director of the University’s Surveys of Consumers, on the results of the University’s index.

Curtin attributed the decline to a number of factors, including a possible war with Iraq.

“There is concern about war in Iraq … and what it might do to the economy,” he said. But “it’s not the strongest factor. The factors that are much more important … are declining household wealth and the perception among consumers that the economy has weakened.”

Business School Prof. Richard Sloan had a mixed opinion about the numbers. While he said he fundamentally believed “the market’s in bad shape,” he added, “We’re in an unusual situation because there’s always a lag between when the data is collected and when it’s announced. The last couple of weeks, the market has moved up … (and) consumer confidence moves up when the market does.”

On Wall Street, investors initially reacted negatively to the survey news, but a late afternoon recovery kept market indexes relatively unchanged for the day.

The surveys have received increased attention in recent months as economists and market analysts look for signs that the economy is sustaining growth.

Consumer sentiment is widely considered to be a harbinger of consumer spending, which accounts for about two-thirds of all economic activity.

The current fear by analysts is that continual decreases in sentiment and spending may push the economy back into a recession.

“If consumer spending slows, (the economy) is going to be in big trouble,” Sloan said. “I think this is going to be even worse than last year. This may be enough to send us into the double-dip (recession).”

Curtin noted that it is important to see growth in business investment while consumer sentiment is waning.

“I think that’s what pushed us initially into a recession,” he said. “If we don’t see a rebound … that leaves the economy in a very weakened state.”

This does not bode well for the upcoming holiday shopping season, traditionally the biggest time of the year for retailers.

Ed Davidson, owner of Bivouac on South State Street, noted that sales have not met expectations in recent months due to a number of factors, including a weakened economy.

Davidson said warm weather in September, coupled with decreased traveling to Europe, has also kept sales down. He is betting on a cold Michigan winter to keep shoppers coming into his store.

“If the weather is cold, I will be able to overcome the economy,” Davidson said.

The University’s monthly survey findings are based on about 500 telephone interviews with Americans across the country.

The Conference Board’s survey is based on a survey sample of 5,000 individuals.

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