- The Washington Times - Wednesday, February 27, 2002

NEW YORK (AP) Americans' anxiety about the jobs outlook helped pull down consumer confidence in February, suggesting continued volatility as the economy seeks to pull itself out of recession.
The Conference Board, a private economic research group in New York, said yesterday that its Consumer Confidence Index fell to 94.1 from 97.8 in January, below the 97 reading that analysts had been expecting. The result reversed a two-month rise.
"Consumers are a bit worried that economic recovery could slow as they see a continuing higher jobless rate and the setback in the stock market as the result of the Enron scandal," said Sung Won Sohn, chief economist at Wells Fargo. "However, when we are coming out of a recession, it is almost normal to see some volatility in consumer confidence."
In January, the jobless rate dipped to 5.6 percent, a 0.2 percentage point decrease from December, according to the Labor Department. But that occurred because the labor force shrank by 924,000, and economists say the rate will rise again as cautious companies delay rehiring laid-off workers. February figures are scheduled to be released next week.
The industry group's index, based on a monthly survey of about 5,000 U.S. households, is watched closely because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.
The index compares results with its base year, 1985, when it stood at 100. The February figure was the lowest since November, when the reading dipped to a record low of 84.9 after the September 11 terrorist attacks.
To help prop up the economy, the Federal Reserve cut interest rates 11 times last year. But it left rates unchanged last month, citing more prevalent signs that "weakness in demand is abating and economic activity is beginning to firm." Federal Reserve Chairman Alan Greenspan is scheduled to address a congressional panel today.
Oscar Gonzalez, an economist at John Hancock Financial Services in Boston, said that despite the February decline in confidence, he expected consumers in the coming months to keep the economic recovery on track with "cautious and deliberate spending."
"I see no cause for worry," he said. "They're worried about their jobs, but at the same time, I think they sense that this mild recession appears to be ending."
In its report, the Conference Board said consumers' outlook about jobs declined, with 18.4 percent saying they expected more jobs to become available in the next six months, compared with 18.9 percent in January. Those expecting fewer jobs to open increased to 19.3 percent from 18 percent.
Consumers' assessment of ongoing business conditions, meanwhile, was less favorable. Consumers rating current business conditions as good declined to 17.2 percent from 18.2 percent in January.
Consumers who felt business conditions were bad rose slightly to 22.9 percent from 22.4 percent last month.
Regarding prospects for the next six months, consumers expecting an improvement in business conditions dropped to 22 percent from 24.9 percent in January. Those expecting conditions to sour rose to 11.3 percent from 9.8 percent.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide