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Confidence near two-year lowPosted by Retirement on: 2005-09-27 08:34:56 in category:
Finance [ Print | Permalink / 0 Comment(s) ] Latest Conference Board survey shows bigger-than-expected hit from Hurricane Katrina, gas spike. September 27, 2005: 10:44 AM EDT NEW YORK (CNN/Money) - Consumer confidence took a much bigger hit than expected in September in the wake of Hurricane Katrina and the resulting rise in gasoline prices, as a widely watched index hit its lowest level in nearly two years. The monthly survey from the Conference Board, issued Tuesday, put the confidence index at 86.6 in September, down from a 105.6 reading in August before the storm and the rise in gasoline prices that followed. Economists surveyed by Briefing.com had forecast that the index would fall to 95 in the most recent reading. It was the lowest rating since the 81.7 reading in October 2003. "Hurricane Katrina, coupled with soaring gasoline prices and a less optimistic job outlook, has...created a degree of uncertainty and concern about the short-term future," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Historically, shocks have had a short-term impact on consumer confidence, especially on consumers' expectations," Franco added. "Fuel prices remain high, though they have retreated in recent days, and when combined with a weaker job market outlook, will likely curb both confidence and spending for the short-run." The survey of 5,000 U.S. households was conducted through Sept. 20. Those claiming business conditions are "good" declined to 25.2 percent from 29.7 percent, while those claiming conditions are "bad" increased to 17.7 percent from 15.1 percent. The view of the future turned even more sharply lower, with 19.8 percent now expecting business conditions to worsen in the next six months, nearly double the 10 percent looking for a downturn a month earlier. Those expecting fewer jobs to be available in six months increased to 25 percent in September, up from 17.3 percent in August. And consumers anticipating their incomes to decrease in the months ahead rose to 10.8 percent from 8.9 percent in August. The number of consumers looking for rough times ahead also overtook the 15.3 percent looking for improved business conditions in the next six months, down from 18.7 percent who had been looking for improvement a month earlier. A downturn in consumer confidence, especially if it is prolonged, can cause a sharp drop in spending. That can in turn cause a significant slowing in the U.S. economy, which depends on consumer spending for nearly three-quarters of economic activity. Still U.S. stocks moved only slightly lower on the confidence report. While the survey showed more doubts than expected, it wasn't the first reading on confidence since the storm to show a decline. The markets were ready for a bad number, said Steven Wieting, senior economist at Citigroup. He said he's not sure even the plunge in confidence will put a brake on what's been relatively strong consumer spending recently. "Seeing a two-year low in confidence in the wake of Hurricane Katrina isn't that surprising," said Wieting. "The news in the month of September has been terrible. The television coverage and the emotional impact of the story has a big effect on confidence in the short run. But spending has been inconsistent with these confidence numbers." Homepage Other community sites http://www.business-business.biz Please support our sponsors. To design your custom retirement plan. http://www.retirement-plan.us For planning IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management-National ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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