Key Measure of Consumer Confidence Slips
Posted on: Tuesday, 30 December 2003, 06:00 CST
A key measure of consumer sentiment slipped in December amid persistent anxiety about the job market, an industry group reported Tuesday.
The Conference Board said its consumer confidence index fell to 91.3, following a surge in November to a revised 92.5, its highest level in more than a year. The pullback had been expected, although the numbers released Tuesday were below expectations; analysts had forecast the index would come in at 92.2.
"Job worries continue," said Lynn Franco, research director for the board. "While consumers expect the job situation to improve in the months ahead, until a significant turnaround takes place, consumers' optimism about current-day conditions will continue to lag behind their expectations."
Consumer confidence is closely watched because consumer spending accounts for two-thirds of the economy. Consumers who are more confident about the economy's prospects spend more; those who are pessimistic are more likely to limit their purchases.
Still, even with December's decline, analysts said the outlook appears to be improving.
"I think the report shows some degree of stabilization," said Parul Jain, deputy chief economist at Nomura Securities International, who noted that a year ago, the consumer confidence index stood at 80.7.
"Expectations are up overall, it's only the present situation that is still worrisome. On balance, things are looking pretty strong."
Indeed, while the board's Present Situation index declined to 73.9 from 81.0, its Expectations index increased to 102.9 from 100.1.
The employment outlook was also higher, with 21.7 percent of those surveyed by the board anticipating more jobs to become available in the next six months. Last month, that figure was 18.5 percent.
The Conference Board report is based on data collected from 5,000 U.S. households. The cutoff for the results was Dec. 16, a day after fugitive fallen Iraqi leader Saddam Hussein was captured.
Jain said that although Hussein's capture was a positive for consumer confidence, she believes that the stock and job markets performance were more important.
Saddam's capture is "icing on the cake but I think it would have marginal impact," she said.
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The Conference Board: http://www.conference-board.org/
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