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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: All Mtn Ski who wrote (4698)	9/25/2001 12:17:29 PM
From: John Pitera	Respond to of 33421

Consumer Confidence Plunges Even More Than Expected A WALL STREET JOURNAL ONLINE News Roundup September 25, 2001 NEW YORK -- Consumer confidence plunged in September as the terrorist attacks exacerbated Americans' concerns about the already frail U.S. economy, the Conference Board said Tuesday. The group said its consumer-confidence index tumbled to 97.6 from a revised 114 in August. Economists had expected confidence to drop, but not nearly so severely. The decline was the largest monthly drop since October 1990. The board's expectations index fell to 79.2 in September from 93.7 the prior month, while its present-situation index fell to 125.2 from 144.5. The index is based on data collected before and after the Sept. 11 terrorist attacks. The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100. The announcement of tens of thousands of layoffs in the airline industry and uncertainty about the government's response to the attacks have deepened consumers' worries about their jobs, economists said. In fact, the board report found that the percentage of consumers claiming jobs were "hard to get" climbed to 18.5% in September from 16% in August. As a result, they're less inclined to open their wallets. "We do have to fear fear itself. It matters, it affects consumer spending," said Bill Cheney, chief economist at John Hancock Financial Services. "If people aren't confident, people don't spend and the economy is damaged by that." In addition, the attacks have simply saddened many consumers, sapping their urge to shop, he said. "If people are depressed, their willingness to do anything is going to be affected, which includes going out and spending money," he said. Home Sales Surged Before Attacks Separately, sales of existing homes soared to a record in August, but the real-estate business dropped off sharply after the terrorist attacks. Home sales increased to a record 5.5 million annual rate in August, a 5.8% rise from July's revised 5.2 million annual pace, the National Association of Realtors said. Previously, July sales had been reported at a 5.17 million annual rate. However, the group said the housing market was already feeling the effect of September's attacks and would likely continue at more subdued levels. "We are in a recessionary environment. Our financial system is under increased pressure and scrutiny," said David Lereah, the association's chief economist. "All this said, housing markets will weaken a bit, [but] they will not fall out of bed. The housing markets will continue to remain strong." Mr. Lereah said real-estate activity plunged 50% to 70% on Sept. 11, 12 and 13. In the first weekend after the Sept. 11 attacks, real-estate business was about 10% lower nationally and about 20% lower in the Washington, D.C., and New York areas, he said. Economists had expected home sales to increase only slightly to a 5.2 million annual rate, according to a survey by Thomson Global Markets. In its previous report in July, the association recorded signs of slowing in housing markets, which had remained buoyant even as much of the economy struggled earlier in the year. Falling long-term interest rates have supported home sales for most of 2001, and mortgage rates have recently fallen below 7%. In August, the inventory of homes on the market rose to 4.8 months from July's revised 4.6 months' supply. The median home price increased to $154,700 in August, compared with a revised $151,700 in July.