Consumer confidence fell to a 20-month low during November as people became increasingly pessimistic about the future of the economy, research shows.
Nationwide said its expectations index, which measures people’s optimism towards the economic situation in six months’ time, dived by nine points during the month to 61, its lowest level since March 2009 and more than 50 down on where it stood in November last year.
The fall was driven by a nine-point jump in the number of people who think the economy will be worse in six months’ time than it is today, while there was also an 8% fall in the proportion of people who think there will be many or some jobs available.
But consumers are also pessimistic about the current economic situation, with 69% of people saying they think it is bad, 5% more than during October. The number of people who believe there are not many jobs available also rose by 6% to 64%.
Meanwhile, the spending index dropped to its lowest level for two years, diving by 13 points to stand at 79, as people shied away from making big purchases.
Just 22% of people think it is currently a good time to make a major purchase, such as a house or car.
The group said the Comprehensive Spending Review may have made people more cautious, as they thought about the impact Government spending cuts would have on their own finances, while consumers are also likely to have found their spending power eroded as earnings growth failed to keep pace with inflation.
The overall Nationwide Consumer Confidence Index dropped for the third consecutive month to stand at only 45 points, its lowest point since March 2009 and just over half its long-run average of 82.
Martin Gahbauer, Nationwide’s chief economist, said: “Consumer confidence continued its downward trend during the month leaving the index close to the historic lows recorded at the beginning of 2009.
“The strong rally in sentiment that took place from the middle of 2009 into the first quarter of this year has now been almost completely reversed, even though the recovery has been stronger than most observers had expected.”