Consumer confidence index dropped even more than analysts expected and is the lowest it has been in two years. It dropped 18.9 points in September for a reading of 86.6, down from 105.5. Economists were expecting a reading of 98. The drop was the largest fall from month to month in 15 years.
Investors began selling, but Greenspan calmed investors by emphasizing “the incredible resilience of the U.S. economy in terms of flexibility”. Greenspan stated that before policy-makers respond to disasters, markets react through prices, interest rates and exchange rates, which work together to cushion the economy.
I am pleasantly surprised that Greenspan’s words insoired so much confidence considering the huge fall in consumer confidence and the importance of domestic spending to the US economy. I’m not conviced that the confidence Greenspan inspired today will keep markets from declining in the next several days, however. We shall see…