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Consumer confidence lowest since ’11
NEW YORK — Americans are feeling worse about the economy than they have in a long time — a fact that could have wide-reaching implications everywhere from Wal-Mart to the White House.
Despite an improving U.S. job and housing markets, consumer confidence fell to the lowest level it's been since November 2011, according to the Conference Board. The results are the latest swing in the index, which has been on a roller-coaster ride this year.
The index declined in January, rose in February and then posted four months of declines before registering an increase in July. August's reading indicates that the gains in the job and housing markets aren't big enough to put to rest Americans' economic fears.
These numbers not only threaten to put a damper on the two biggest shopping periods of the year for retailers — back-to-school and the Christmas season — but it also could have an impact on how Americans vote in November's presidential election.
Mark Vitner Vitner, a Wells Fargo Securities senior economist, says he has looked at October confidence figures during the past elections of sitting presidents since 1972, and no president has been re-elected when confidence was below a reading of 90, which a level that indicates a healthy economy. The index hasn't reached that level since December 2007.
The New York-based Conference Board's consumer confidence index in August fell to 60.6, down from a revised 65.4 in July and the 66 level analysts were expecting. The index now is the lowest it's been since November 2011 when the reading was at 55.2.
"This report is a little disturbing going into the fall," said Wells Fargo Securities senior economist Mark Vitner. "Consumers are less optimistic about the future."
The August consumer confidence reading shows that despite signs the economy is recovering, many Americans aren't being encouraged by the snail's pace by which it's improving.
Home prices rose 0.5 percent in June from the same month last year, the first year-over-year increase since the summer of 2010, according to the Standard & Poor's/Case-Shiller home price index that was released Tuesday. Additionally, all 20 cities tracked by the index rose in June from May, the second consecutive time in which every city posted month-over-month gains.
The job market also is slowly recovering. Employers added 163,000 jobs in July, the most since February. Job gains averaged 73,000 jobs a month from April through June. But that's not enough to keep up with a rising population, and the unemployment rate increased to 8.3 percent from 8.2 percent in June. But most economists say stronger growth is needed to produce enough jobs to lower unemployment — and make Americans feel better.
"Consumers were more apprehensive about business and employment prospects," said Lynn Franco, director of economic indicators at the Conference Board, in a statement.
The consumer confidence index, based on a survey conducted Aug. 1 to Aug. 16 with about 500 randomly selected people nationwide, underscored anxiety about the future. Consumer confidence is widely watched because consumer spending accounts for 70 percent of U.S. economic activity.
By Donald Lambro
Growth spikes are little more than trend-free anomalies
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