NEW YORK — Americans’ worries about job security flared up in September, causing a widely watched barometer of consumer confidence to dip unexpectedly and raising more concern about the upcoming holiday shopping season.
The New York-based Conference Board, a private research group, said that its Consumer Confidence Index dipped to 53.1 in September, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had expected a reading of 57.
The index had enjoyed a three-month climb fueled fueled by signs that the economy might be stabilizing. That followed a historic low in February of 25.3 and a bumpy road after June as rising unemployment has caught up with shoppers.
A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.
While the confidence index has doubled from the historic low in February, it’s still about half of the historic average of 94.8, and below the 61.4 level right before the collapse of Lehman Brothers last fall
Paul Dales, U.S. economist at Capital Economics Ltd, said that despite a rally in the stock market, shoppers are fixating on the job market and declining wages.
“Falling employment and incomes are undermining confidence and are likely to continue to do so,” Dales wrote in a report released today. “Confidence is set to remain at fairly subdued levels,” adding that consequently consumer spending will remain modest.
Economists watch consumer sentiment because spending on goods and services for consumers, including housing and health care, accounts for about 70 percent of U.S. economic activity by federal measures.
Confidence, particularly its component measuring shopper’ outlook, is considered a leading indicator and is a good barometer of spending levels over time, according to Lynn Franco, director of The Conference Board Consumer Research Center.
The Conference Board’s Present Situation Index, which measures consumers’ current assessment of the economy, declined to 22.7 from 25.4. The Expectations Index, which measures consumers’ outlook over the next six months, dipped to 73.3 from 73.8 last month.
“While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes,” said Franco. “With the holiday season quickly approaching, this is not very encouraging news.”
Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow.
According to a report issued today, the Standard &Poor’s⁄Case-Shiller home price index of 20 major cities rose 1.2 percent from June to a reading of 143.05. Though home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month.
But on Friday, the Commerce Department issued a downbeat housing report, noting that sales of new homes inched up only 0.7 percent last month, below economists’ expectations. Sales have risen 30 percent from the bottom in January. Yet they remain about 70 percent below their peak of four years ago.
The big concern for consumers is the job market. Economists surveyed by Thomson Reuters project job losses slowed in September. On average, they predict 180,000 were lost this month, down from 216,000 in August. But Labor Department figures to be released this Friday are projected to show unemployment ticking up to 9.8 percent in September from 9.7 percent in August.
The weak job market, along with tight credit, has led shoppers to limit spending and focus on discounts when they do buy. Even those not worried about losing a job or finding a new one are embracing frugal behavior, buying only necessities and using more coupons.
Economists expect holiday sales to be at best flat from a year ago, the weakest holiday season since at least 1967 when the Commerce Department started collecting the data.
“Shoppers’ habits have changed,” said Frank Badillo, senior economist at consulting group TNS Retail Forward. “They remain focused on cutting back and trading down to discount retailers and to lower-priced brands. All of those behaviors are going to be enforced over the holidays.”
Badillo projects sales for October through December won’t change from last year, compared with the 4.5 percent decline last year from the year before.
The consumer confidence survey, which was sent to 5,000 households and had a cutoff date of Sept. 22, showed lingering worries about the weak job market and overall business conditions.
Those claiming business conditions are “bad” increased to 46.3 percent from 44.6 percent, while those claiming conditions are “good” increased to 8.7 percent from 8.5 percent. Consumers’ appraisal of the job market was also less optimistic. Those claiming jobs are “hard to get” increased to 47.0 percent from 44.3 percent, while those claiming jobs are “plentiful” decreased to 3.4 percent from 4.3 percent.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
