- The Washington Times - Tuesday, September 28, 2004

NEW YORK (AP) — Job worries helped push consumer confidence down in September for the second consecutive month, a New York-based private research group said yesterday.

The Consumer Confidence Index fell 1.9 points to 96.8 from a revised reading of 98.7 in August, according to the Conference Board. Analysts had expected a reading of 99.5.

“The recent declines in the index were caused primarily by a deterioration in consumers’ assessment of employment conditions,” said Lynn Franco, director of the organization’s Consumer Research Center. “Soft labor market conditions have clearly taken a toll on consumer confidence. Still, expectations for the next six months are virtually unchanged from August.”

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all economic activity in the country.

Consumer confidence, which was as high as 144.7 in May 2000, when the job market was flourishing, has been volatile since the economy emerged from recession in November 2001. It reached its lowest point in March last year, at 64.4, with the U.S.-led invasion of Iraq. However, there was a gradual but inconsistent improvement as the job market recovery has remained tenuous, Miss Franco said. The index was at 105.7 in July.

The Present Situation Index, one component of the consumer confidence reading, fell to 95.5 from 100.7 in August. The Expectations Index, which measures consumers’ outlook over the next six months, edged up to 97.6 from 97.3 last month.

The Conference Board’s readings were derived from responses received through Sept. 20 to a survey mailed to 5,000 households. The figures released yesterday include responses from at least 2,500 households. The figures for August were revised after all the surveys were tabulated.

The period captured the continued volatility of oil prices, which topped the psychological milestone of $50 per barrel yesterday, and the recent hurricanes that have beset Florida. The hurricanes did not have an effect on the confidence numbers, but could erode consumer sentiment later as the economic effect is digested in the region, Miss Franco said.

And although rising oil prices do not directly hurt consumer confidence, they erode corporate profits, which makes businesses more conservative in hiring, said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C.

Still, Mr. Vitner said the consumer confidence readings in September, though “disappointing,” were not “that weak.” He noted that the main index is still close to a reading of 100, which is the benchmark for “normal economic times.”

“It’s not that things are bad. They’re just not great,” Mr. Vitner said. “We’re in an in-between mode.”

Mr. Vitner and other economists are awaiting September job figures from the Labor Department, expected Oct. 8. Analysts are expecting the nation’s nonfarm payrolls to add 153,000 jobs. Employment growth slowed sharply in July — only 32,000 jobs were added — but rebounded in August when 144,000 jobs were added.

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