Consumer Confidence Plummets on Job Fears
By ANNE D'INNOCENZIO, AP
NEW YORK (Sept. 30) - Consumer confidence, which had rebounded in August, dropped more than expected in September, dragged down by a sluggish job market.
The Consumer Confidence Index fell to 76.8, down nearly five points from the revised 81.7 registered in August, the New York-based Conference Board said Tuesday.
The decrease was steeper than expected - analysts were looking for a reading of 80.5. It was the biggest decline since July, which saw consumer sentiment fall 6.5 points to 77 from 83.5 in June.
''The lack of improvement in labor market conditions continues to dampen consumers' spirits,'' said Lynn Franco, director of the board's consumer research center. ''Despite September's retreat, consumers remain cautiously optimistic about the outlook for the next six months. Consumer spending is likely to continue at or near current levels.''
Consumer confidence has been on a roller coaster ride since April when it rebounded sharply, prompted by the swift outcome of the U.S.-led war in Iraq. Franco said that consumer sentiment will likely be volatile until the labor market shows some signs of improvement, and the pattern is typical of what was seen when the economy was coming out of the 1991 recession.
Economists closely track consumer confidence because consumer spending accounts for two-thirds of U.S. economic activity.
A component of the confidence index, the Expectations Index, fell to 88.4 from 94.9. Another component, the Present Situation Index, sagged to 59.5 from 62.0.
Consumers anticipating that business conditions will improve over the next six months slipped to 21.4 percent from 22.6 percent in August. Those anticipating business conditions to deteriorate rose to 11.9 percent from 10.6 percent.
The employment outlook is also less optimistic. Those anticipating the job market to improve in the next six months decreased to 16.7 percent from 18.0 percent. Those expecting fewer jobs to become available increased to 21.0 percent from 18.6 percent. Consumers anticipating an increase in their incomes fell to 18.6 percent from 20.7 percent.
Consumers' appraisal of current conditions was influenced by the job market. Those reporting jobs are ''hard to get'' increased to 35.3 percent from 34.1 percent. Those claiming jobs are ''plentiful'' retreated to 10.0 percent from 11.3 percent in August.
Consumers' assessment of the present business environment remained relatively unchanged. Those rating current business conditions as ''good'' edged up to 16.0 percent from 15.9 percent, while those holding the opposite view declined to 29.6 percent from 31.0 percent.
On Wall Street, stock prices extended their decline for the day following the consumer confidence news, with the Dow Jones industrials down more than 100 points by late morning.
Investors have been growing more jittery about stock prices, fearing they're too expensive given that the economy is still struggling.
09-30-03 11:57 EDT
Copyright 2003 The Associated Press. |
