Consumer confidence and unemployment data confirm deep depression in US economy – Dow can fall below 5,000 in the next three months
Peter Oberois
Dec. 28, 2008

On Tuesday the Conference Board will report its reading on consumer confidence. The market is looking for a result of 46, compared with 44.9 in November. However, some analysts believe that the confidence index can fall sharply in the next several months.

The labor conditions continued to worsen in December. Concerns about a deepening global recession, rising unemployment and falling asset prices are dampening spirits and limiting spending.

The four week moving averages of both initial and continuing claims moved sharply higher between the November and December survey weeks. The unemployment picture is getting gloomier with lower consumer confidence. US consumers account for 70% of the growth in economy. The business confidence has disappeared. Entrepreneurs are hiding in their home or have taken a long-term vacation. The deflation is taking over the stagflation scenario.

The net result of all this that the stock market can collapse below 5,000 in Dow Jones Industrial Average in the next three months. January 2009 can be the ugliest month in the stock market history.

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