Associated Press, Published June 26 2012
Consumer confidence slipped in JuneNEW YORK — Americans can't seem to shake their uneasy feeling about the economy.
Consumer confidence fell in June for the fourth straight month as worries about jobs and the overall economy outweighed relief at the gas pump and an improvement in the housing market, according to a private research group.
The decline was modest; the Conference Board said Tuesday that its Consumer Confidence Index fell from 64.4 in May to 62 in June. But the four-month slide from 71.6 in February is significant and corresponds with a slowdown in hiring by U.S. companies over the same period.
The index is widely watched because consumer spending accounts for 70 percent of U.S. economic activity. A reading of 90 indicates a healthy economy. The index hit an all-time low of 25.3 in February 2009.
The latest survey shows that despite lower gas prices, Americans are still worried about stagnant hiring, low home values, the choppy stock market and a worsening European economy that some fear will hurt the U.S.
“We're trying to break free from this orbit, and we haven't been able to,” said Mark Vitner, senior economist at Wells Fargo Economics. “Job market concerns will always trump swings in energy prices.”
Alyson Seligman, who lives in Palm Beach Gardens, Fla., agrees. Seligman, who runs a small public relations firm, said lower gas prices haven't caused her to feel much more confident in the economy.
“Anything can turn on a dime,” she said. “You have to be prepared.”
Worries about job and income growth weighed the heaviest on Americans in the index, which was based on a survey conducted from June 1 through June 14 of about 500 randomly selected people nationwide. The margin of error for the Consumer Confidence Index is plus or minus 5.5 points.
Those stating jobs are “hard to get” increased slightly to 41.5 percent from 40.9 percent, while those expecting more jobs in the months ahead declined to 14.1 percent from 15.4 percent. The proportion of consumers expecting an increase in their incomes declined to 14.8 percent from 15.7 percent.
Consumers’ dwindling confidence since February corresponds with a sharp slowdown in hiring. Hiring averaged 96,000 during the combined period of March, April and May. That marked a slowdown from the average of 252,000 a month in the prior three months.
The strong hiring during the winter helped lift the Consumer Confidence Index from 40.9 in October to the highest reading it had been in a year during February. But in the following months that hiring has slipped, so has consumer confidence.
Meanwhile, a measure of the number of people applying for unemployment benefits over the past month has reached a six-month high, the government said last week. That suggests June could be another lackluster month for hiring. The government releases June data on July 6.
Americans also are grappling with declines in their retirement funds. After rallying earlier in the year, the stock market has lost its steam since the beginning of May amid concerns about the economy both here and abroad. The Dow Jones Industrial Average has fallen nearly 6 percent since early May.
On the news of declining consumer confidence, major stock indexes drifted between slight gains and losses on Tuesday, following steep losses the day before.
Still, Americans have some reasons to be optimistic. A widely watched home price index, released Tuesday, showed that home prices rose in nearly all major U.S. cities in April. That's the second straight month that prices in The Standard & Poor's/Case-Shiller home price index have increased in a majority of U.S. cities.
Additionally, gasoline prices have fallen sharply from a peak of $3.94 in early April to a national average of $3.40 per gallon Tuesday, according to auto club AAA, Wright Express and the Oil Price Information Service. And experts say gas could fall another 11 cents by July 4.
Despite those two positives, Americans are cautious about spending. Several companies, from restaurants to home goods sellers, have said recently that customers are pulling back on spending unless they are lured into stores by big discounts.
Bed Bath and Beyond last week forecast lower earnings for the April-June quarter than analysts expected and said it needed to use more coupons to get people to spend. Furniture chain Ethan Allen Inc. said customer traffic is slowing and shoppers are taking more time to make purchasing decisions.
And Darden Restaurants Inc., which operates Olive Garden and Red Lobster restaurants, expects earnings that are short of Wall Street expectations and said customers were turned off by a $1 increase for Red Lobster's dish “Festival of Shrimp.”
Given growing uncertainty about the economy, Michael P. Niemira, chief economist at The International Council of Shopping Centers trade group, on Tuesday trimmed his sales forecast for June by a 0.5 percentage point.
He now expects revenue at stores opened at least a year to be up 3 percent to 3.5 percent. That follows a 4 percent rise in May.
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