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Restoring Consumer Confidence Proves Tricky Task

The Fed's dramatic interest rate cut is an attempt to increase borrowing and spending. While the government tries to tamp down fears that are lowering consumer confidence, Paul Solman examines what it takes to report the economic indicator.

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  • JIM LEHRER:

    Next, the fear that's driving down consumer confidence. One of the Fed's goals in lowering interest rates today is to increase borrowing and spending. But as our economics correspondent, Paul Solman, reports, restoring consumer confidence is not an easy thing to do.

    LYNN FRANCO, the Conference Board: This is about as bad as it gets.

    PAUL SOLMAN, NewsHour economics correspondent: Lynn Franco runs the widely reported consumer confidence index from the business group, the Conference Board.

  • LYNN FRANCO:

    Over the last two months, we hit an all-time low, and we've been doing this for 41 years.

  • PAUL SOLMAN:

    The key survey questions business conditions, how are they now, the blue line, and expectations, how will they be in six months, the purple. A score of 80 indicates a so-so economy.

    Well, here, expectations have dipped below 40, right? And that's never happened before.

  • LYNN FRANCO:

    Correct. October marked an all-time low for both consumer confidence and the expectations index.

  • PAUL SOLMAN:

    The Conference Board's doleful data were borne out on the ground. At New York's upscale ABC Carpet & Home, for example, where those who could still afford to, we figured, would be shopping. Gene Miranda runs a horse farm on the West Coast and loves the shopping there.

  • CUSTOMER:

    But this is the most fabulous store I have ever been in, in my life.

  • PAUL SOLMAN:

    You're cheery.

  • CUSTOMER:

    I am.

  • PAUL SOLMAN:

    You don't look pessimistic. But…

  • CUSTOMER:

    No.