Canadian consumer confidence has fallen sharply since hurricane Katrina struck, paralleling a similar decline in the United States.

The latest Decima-Investors Group Index of Canadian Consumer Confidence showed a sharp decline in both confidence and optimism.

The index plunged to 75.0, its lowest level since September 2001. The index, which had been remarkably stable for the past three quarters, dropped 13 points from the May level of 87.9.

The decline in consumer confidence is the largest recorded in a single quarter since the index was established in 2001.

“These results likely reflect a combination of rising concerns about energy prices, coupled with concerns about the economic impacts caused by Hurricane Katrina” said Bruce Anderson, CEO of Decima Research, in a release. “The pattern of results indicates that Canadians seem to feel that the macro economic impacts will be more short term than long term, because the sharpest rise is in concerns about the one year economic outlook. While these conditions might depress consumption levels, people appear to think that they will be able to get through the rough patch.”

Charles Feaver, vp of research at Investors Group, stated that, “More consumers say they are worse off now than a year ago – a logical consequence of rising gas prices. But even though Canada is an energy producer, and in a position to benefit from higher prices, the expectation of increased economic activity in the energy sector is clearly not being felt across the country. While Alberta and B.C. residents are more positive about prospects for the Canadian economy, consumers in other regions have more negative expectations.”

The insex is a composite of a series of questions measuring feelings about personal financial as well as national economic sentiment. All five of the component measures dropped in the most recent period, apparently led by a sense that the short- term (one year) economic outlook was darkening.

The results are based on a Decima survey conducted with a representative sample of 2,025 Canadians (18 years and older) conducted between September 8 and 18, 2005. A sample of this size will provide results that can be considered accurate within plus or minus 2.2 per cent, 19 times out of 20.