‘Quite grim’ outlook seen likely to stymie pace of economic growth
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Consumer confidence in the U.S. economy remains “quite grim,” the Conference Board reported Tuesday, as the group’s monthly gauge fell to 48.5 in September, the lowest reading since February.
“September’s pullback in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook,” said Lynn Franco, director of the Conference Board’s consumer research center.
“With so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months,” she said in a statement.
Economists polled by MarketWatch had expected a September level of 51.5.
Confidence for August also was revised slightly, down to 53.2 from a prior reading of 53.5. The index helps analysts compare fluctuations in confidence, with a reading of 100 for the base year of 1985.
While economists recently declared that the recession ended in June of 2009, the confidence data reflect ongoing weakness in the labor market, Franco said.
“Even though the recession has been officially over for quite some time, it still feels like one to consumers,” Franco said. “We have yet to see strong job growth, and that is the dark cloud hanging over consumers.”
She added that generally when the economy is growing at a good clip confidence readings are at 90 and above.
Underscoring their cautious state of mind, a barometer on consumers’ expectations dropped to 65.4 in September — also the lowest level since February — from 72 in August.
The proportion of respondents expecting business conditions in six months to be “worse” rose to 16.4% in September from 13.4% in August, while those expecting fewer jobs increase to 22.7% from 19.6%. Most consumers expect business conditions and employment to be the same.
Consumers’ assessment of current conditions fell to 23.1 — also the lowest since February — from 24.9.
Those saying present business conditions are “bad” rose to 46.1% in September from 42.3% in August, while those saying jobs are “hard to get” climbed to 46.1% from 45.5%. Large proportions also said that business conditions are “normal” and that jobs are “not so plentiful.”
Against this backdrop, buying plans have been affected, according to the Conference Board.
Those consumers with plans to buy homes within six months fell to 1.9% in September from 2.1% in August. However, those planning to buy major appliances increased, reaching 27.5% from 24.6%.
