RAPAPORT... The Conference Board Consumer Confidence Index™ fell to an all-time low in October. The index now stands at 38, down sharply from 61.4 in September, which had been a slight gain over August. The Present Situation Index decreased to 41.9 from 61.1 during September and the Expectations Index fell to 35.5 from 61.5. Lynn Franco, director of the Conference Board
Consumer Research Center, described consumers as “extremely pessimistic.”
Those stating business conditions are “bad” increased to 38.3 percent from 33.4 percent in September, while those claiming business conditions are “good” declined to 9.2 percent from 12.8 percent. The percentage of consumers describing jobs as “hard to get” rose to 37.2 percent from 32.2 percent in the previous month, as those claiming jobs are “plentiful” decreased to 8.9 percent from 12.6 percent.
Consumers expecting business conditions to worsen over the next six months surged to 36.6 percent from 21 percent in the previous month, while those anticipating conditions will improve fell to 9.9 percent from 13.4 percent. The percent of consumers expecting fewer jobs in the coming months spiked to 41.5 percent from 26.9 percent, while those anticipating more jobs dropped to 7.4 percent from 11.9 percent. The proportion of consumers expecting their incomes to increase sagged to 10.8 percent from 15.1 percent. The Consumer Confidence Survey™ is based on a representative sample of 5,000 U.S. households.
U.S. GDP, Personal Spending Fall
Real gross domestic product (GDP) in the U.S. fell at an annual rate of 0.3 percent in the third quarter compared to a rise of 2.8 percent in the second quarter, the government reported. The third-quarter decrease primarily reflected a drop in consumer spending, residential fixed investment and equipment and software. The price index for gross domestic purchases increased 4.8 percent.
Real personal consumption expenditures (PCE) decreased 3.1 percent in the third quarter in contrast to an increase of 1.2 percent in the second quarter. Purchases of goods and services by U.S. residents decreased 1.3 percent in the third quarter, compared with a decrease of 0.1 percent in the second quarter. Personal income increased 1 percent to $31 billion in the third quarter, compared with an increase of 7.9 percent to $228.4 billion in the previous quarter.
IMF Predicts U.S. Growth SlowdownThe International Monetary Fund (IMF) forecasted that the U.S. economy, which grew 2 percent in 2007, would clock in closer to a growth rate of 1.6 percent this year, with virtually flat growth in 2009. In the organization’s “World Economic Outlook” (WEO) report, the IMF stated that as a result of the “regulatory failure” that caused the U.S. financial crisis, the world economy is entering a major downturn in the face of the “most dangerous shock in mature financial markets since the 1930s.” The report predicted that the global economy’s growth rate will slow to 3.9 percent in 2008, down from 5 percent in 2007, and grow by 3 percent in 2009.
U.S. Rough Trade IncreasesThe U.S.’s rough exports jumped 41 percent in August to $52 million, while rough imports grew 26 percent to $53 million. Polished diamond imports grew 2.6 percent to $1.4 billion during the month, while polished exports increased 10.3 percent to $1.1 billion.
For the first eight months of 2008, rough imports were up 12 percent to $599 million, but rough exports dropped 4.7 percent to $304 million. Polished imports rose 16 percent to $13.7 billion and polished exports surged 44 percent to $10.2 billion during the period.
Belgium’s Polished Trade ClimbsBelgium’s polished exports jumped 40.9 percent to $1.39 billion in September and, by volume, climbed 8.9 percent to 894,598.92 carats. Polished imports increased 75.7 percent to $1.3 billion in September and were also up 23.8 percent by volume to 920,292.56 carats. The country’s rough exports rose 34.8 percent to $1.1 billion for the month, though they fell 13.8 percent by volume to 10,692,378.26 carats. Rough imports increased 4.2 percent to $1.1 billion for the month, but their volume increased a mere 0.5 percent to 11,830,569.31 carats.
Israel’s Polished Imports Rise in ValueIsrael’s polished diamond imports increased 17 percent to $424.2 million in September, while the average prices of those imports jumped 35 percent to $1,643.45 per carat, according to the country’s Ministry of Industry, Trade and Labor. Polished diamond exports rose 1 percent to $622.75 million during the month.
Israel cut its rough diamond imports by 4 percent to $343.4 million in September, with the average price of rough imports increasing 7 percent to $351.50 per carat. Rough exports grew 1 percent to $255.7 million, while their prices fell 9 percent to an average of $207.51 per carat.
For the first nine months of the year, Israel’s polished exports rose 3 percent to $5.5 billion and polished imports climbed 16 percent to $3.5 billion. Rough imports for the period increased 8 percent to $4 billion, while rough exports grew 20 percent to $3 billion. The data showed that Israel’s polished diamond exports to the U.S. fell 12 percent to $2.4 billion in the first nine months of 2008. The U.S, which accounts for 43 percent of Israel’s polished exports, has been the only market to falter so far this year.
India’s Polished Imports SurgeIndia’s polished imports grew 112 percent to $726 million in September 2008 compared to the previous year, according to data published by the Gem & Jewellery Export Promotion Council (GJEPC). The country saw its polished exports rise 18 percent to $1.4 billion for the period.
Rough imports increased 30 percent to $958.8 million and the country’s rough exports grew 89 percent to $77 million for the month. India’s net rough imports, indicating the extent to which its rough imports exceeded its exports, fell 27 percent to $882 million for the month. India’s net diamond account — net polished exports less net rough imports — declined to negative $177.3 million in September, compared to a positive $179.6 million one year ago.
Japan’s Polished Imports DeclineJapan’s polished diamond imports fell 25.4 percent to $45.9 million in August, according to data compiled by the J Club Inc. from the country’s Customs Bureau and Ministry of Finance. Japan’s imports by volume remained flat compared with August 2007 at 177,232 carats, but the average price fell 25 percent to $259 per carat.
For the first eight months of the year, the country’s polished diamond imports declined 10 percent to $536.2 million. Imports increased 5 percent by volume during the period to 1.6 million carats. Imports from India, Japan’s largest source of polished diamonds, dropped 39 percent compared with the previous year to $22.7 million, but imports from Hong Kong rose 137 percent to $7.4 million. Imports from Israel and Belgium were up 28 percent and 8 percent, respectively.
Article from the Rapaport Magazine - November 2008. To subscribe click here.