NEW YORK Americans' confidence in the economy darkened further in July as worries about job security offset any enthusiasm about the resumed stock market rally that has helped bolster retirement accounts.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index, which retreated last month, fell to 46.6, down from 49.3 in June. Economists surveyed by Thomson Reuters were expecting a reading of 49. It would take a reading above 90 to signal that the economy is on solid footing.
The second straight month of decline follows an upswing in confidence this past spring fueled by a stock market rally and some signs that the economy was improving.
The disappointing report on confidence followed an upbeat report on the housing market, also released Tuesday, that offered more evidence that the real estate market was showing signs of life. According to the Standard &Poor's/Case-Shiller index, home prices in May posted their first monthly increase since the summer of 2006, indicating prices may finally stabilizing.
But clearly, shoppers are looking past surging stock prices and a stabilizing housing market and remain nervous about their own financial security because of mounting job losses.
And the job cuts keep coming. Verizon Communications Inc. said Monday that it plans to slash more than 8,000 employee and contractor jobs before the end of the year.
Americans' lack of confidence presents an obstacle for retailers and other businesses because consumer spending accounts for more than 70 percent of economic activity.
According to the Conference Board, The Present Situation Index, which measures shoppers' current assessement of the economy, declined to 23.4 from 25.0 last month. The Expectations Index, which measures shoppers' outlook over the next six months, fell to 62 from 65.5 in June.
"Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
She noted that the decline in the Present Situation Index was caused primarily by a worsening job market. The deteriorating outlook for consumers was "more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions." However, Franco said.
"More consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead," Franco said.
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