By LISI De BOURBON
Associated Press
NEW YORK – Consumer confidence plunged in September as last week’s terrorist attacks exacerbated Americans’ concerns about the already frail U.S. economy, the Conference Board said Tuesday.
The New York-based business group said its Consumer Confidence Index sank to 97.6 from a revised 114.0 in August.
The figure is based on data collected before and after the terrorist attacks Sept. 11.
The slide, the largest monthly point drop since October 1990, as the Persian Gulf War approached, throws even more support behind many economists’ predictions that the strikes would tip the already battered U.S. economy into a recession.
“The economy faces tougher times ahead,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “While consumers have managed to keep the U.S. out of a recession for several years now, that soon may no longer be the case.”
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 with 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 percent in September from 16 percent 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.
Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.