Consumer confidence falls; quick-recovery hopes fade
9/30/2009NEW YORK - Concerns that consumers won't help drive a speedy and strong economic recovery only escalated yesterday after an influential barometer of confidence fell unexpectedly in September.
The Conference Board's Consumer Confidence survey showed worries about job security seem to be offsetting any enthusiasm about rising home values and stocks.
"Last year, consumers were shellshocked as they worried about what might happen to the economy," Mark Vitner, senior economist at Wells Fargo, said. "Today, shoppers … don't have the means to step up spending."
The Conference Board, a private research group, said its confidence index dipped to 53.1 in September from a revised 54.5 in August. Economists surveyed by Thomson Reuters had expected a reading of 57.
The report followed rosier data on housing released yesterday that showed home prices rose for the third month in a row in July. Investors fixated on the confidence report, giving back early gains. The Dow Jones industrials fell 47.16, or 0.5 percent, to 9,742.20.
Among the worrisome signs in the Conference Board's release were that shoppers' spending intentions declined for big-ticket purchases: cars, homes, and major appliances. The report confirmed that "the consumer sector will not be much of a driver of the recovery beyond the third quarter, when auto sales spiked in response to the temporary 'Cash for Clunkers' program," according to Brian Bethune of IHS Global Insight.
The index, which hit a historic low of 25.3 in February, had enjoyed a three-month climb from
March through May fueled by signs that the economy might be stabilizing.
Recent economic data, from housing to manufacturing, have offered mixed signals but some evidence that an economic recovery might be slow.
According to a report issued yesterday, the Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 percent from June to a reading of 143.05.
Although home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month. That positive news followed a Commerce Department report Friday that noted that sales of new homes inched up only 0.7 percent last month, below estimates.
Sales have risen 30 percent from the bottom in January. Yet they remain about 70 percent below their peak of four years ago.
The big concern for consumers is the job market. Mr. Vitner said that while layoffs have slowed, hiring hasn't picked up.