NEW YORK – The outlook for the holiday shopping season darkened on Tuesday as the latest consumer confidence reading showed Americans even more pessimistic about the economy during October. Hurricanes, surging gasoline prices and worries about the job market took a further toll on consumers.
A separate report on home sales during September also pointed to growing consumer uneasiness.
The Conference Board said its Consumer Confidence Index fell to 85 in October, the lowest level since October 2003 and down from September’s revised reading of 87.5, which had been the sharpest drop in 15 years. Analysts expected an October reading of 88 for the index, which is compiled from a survey of U.S. households.
“Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, (gas) pump shock and a weakening labor market,” Lynn Franco, director of the private research group’s Consumer Research Center, said in a statement.
She said the “degree of pessimism, in conjunction with the anticipation of much higher home heating bills this winter, may take some cheer out of the upcoming holiday season.”
The drop in confidence contributed to a decline on Wall Street, where the Dow Jones industrial average was down more than 50 points in late trading.
Meanwhile, the National Association of Realtors said sales of previously owned homes were unchanged in September, at the second-highest level on record. However, the Realtors said sales would have fallen without an increase in demand among people left homeless by Hurricane Katrina.
The latest snapshot of consumer confidence comes at a challenging time for the U.S. economy. There are worries about rising prices across the economy, and Federal Reserve officials have said more interest rate hikes are in the offing to keep inflation in check. While the national job market did not suffer as devastating a blow from hurricanes Katrina and Rita as economists had feared, it did lose momentum.
Retailers are already preparing for a difficult holiday season. Although gasoline prices have fallen in recent weeks, they still are quite high, and home heating costs are expected to soar this fall and winter, forcing many consumers to budget carefully for the holidays.
“Consumers are fairly worried about the economy. I think the holiday season is going to be ho-hum,” said Mark Vitner, senior economist with Wachovia Securities in Charlotte, N.C.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
