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Worsening job picture fuels slide in confidence

Ashley M. Heher
AP Retail Writer

Chicago — Consumers’ confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak, according to a private research group, fueling speculation that an already gloomy holiday shopping forecast could worsen.

The Consumer Confidence Index, released by The Conference Board, sank unexpectedly to 47.7 in October — its second-lowest reading since May.

Forecasters had predicted a higher reading of 53.1.

A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

The index has seesawed since reaching a historic low of 25.3 in February and climbed to 53.4 in September.

Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. While the reading doesn’t always predict short-term spending, it’s a helpful barometer of spending levels over time, especially for expensive items.

Recent economic data, from housing to manufacturing, have offered mixed signals but some evidence that an economic recovery might be slow.

But on Tuesday, the figures showed that shoppers have a grim outlook for the future, according to The Conference Board, expecting a worsening business climate, fewer jobs and lower salaries. That’s particularly bad news for retailers who depend on the holiday shopping season for a hefty share of their annual revenue.

“Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.

Economists expect holiday sales to be at best flat from a year ago, which had the biggest declines since at least 1967 when the Commerce Department started collecting the data.

The Consumer Confidence Index survey, which was sent to 5,000 households, had a cutoff date of Oct. 21.

The news came on the heels of rosier data about the nation’s housing market.

The Standard & Poor’s/Case-Shiller home price index, which studies real estate transactions in 20 major cities, showed home prices rose in August, the third straight monthly increase and a sign that a housing recovery might be taking hold.

The measure showed the home price index climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.

Prices are at levels not seen since August 2003 and have fallen almost 30 percent from the peak in May 2006.

The latest index shows a widespread turnaround with prices rising month-over-month in 15 metro areas since June.

One comment

  1. Meanwhile….Government spending grows exponentially to unimaginable levels, with 535 Washington politicians working 24/7 striving to grow government even more, with non-stimulating stimulus’, cap and tax, healthcare takeover, ‘green’ subsidies that put us in the red. Well, I guess it must be difficult as, along with their normal job duties, they now have to run several Banks, Car companies, and Insurance firms, with their sights set on a healthcare takeover besides. The result… tirelessly brainstorming new ways to tax us all, while their feerless leader…….golfs.
    How ’bout that hope and change…Mmm, Mmm, Mmm.
    Can you say…”buyers remorse”
    Oh wait, I’m sorry…he’s just ‘mopping up’ the mess the previous administration left. You know, that awful 5% unemployment problem, and that pesky DOW at 13,000 and all, and that housing thing….never mind, that was Chris Dodd and Barney Franks doing , but still, it was Bush’s fault!

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