Consumer confidence falls to lowest point since April
Just as retailers enter the most critical part of their year, the Conference Board announced Tuesday that the consumer-confidence index fell for the third straight month, dipping to 70.4. Many economists and financial analysts had expected the index to rise largely because of the end of the budget battles in Washington. Consumers, however, seem to be less concerned about fights between the president and Congress and more worried about the economy.
"When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions," said Lynn Franco, director of economic indicators at the Conference Board, in a published statement. She also noted that such pessimism could be a problem for many retailers that rely on holiday shopping to boost their annual bottom line.
Confidence started out strong at the beginning of this year, but it began to wane in mid-summer as threats to shut down the government started to seem more likely. Stephen Stanley, chief economist of Pierpont Securities, told MarketWatch that in addition to the ongoing budget battle, the disastrous rollout of the Affordable Care Act and sluggish labor and housing market have soured the mood of many Americans.
Consumer confidence remains well below its historical norm, as the index usually hovers above 100 during strong economic times. One of the major reasons that it continues to stay depressed is the unemployment rate, which is still over 7 percent. To bring confidence back to its normal levels, many economists say that U.S. companies would need to rapidly create new jobs.
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