- The Washington Times - Wednesday, January 1, 2003

NEW YORK (AP) Consumer confidence unexpectedly fell in December as the outlook for employment worsened, energy prices rose and the stock market slumped during a period of heightened uncertainty around the globe.

It was the sixth time in seven months that consumer sentiment soured, the New York-based Conference Board reported yesterday.

The research group's Consumer Confidence Index dropped to 80.3 from a revised 84.9 in November, the only month the index rose since June. Analysts had been expecting a reading of 88.0 in December.

Americans' surprisingly pessimistic view of the economy was reflected in the abysmal holiday shopping season. It was shaped by the increased likelihood of a U.S.-led war against Iraq and higher prices for gasoline and heating oil the result of political strife in oil-rich Venezuela, said David Watt, a Toronto-based economist for BMO Nesbitt Burns.

Recent tensions between the United States and North Korea over North Korea's nuclear-weapons program made matters worse, as did steadily falling stock prices, Mr. Watt said.

The market shrugged off the weaker-than-expected reading; the major stock indexes were essentially flat in light trading ahead of the New Year's Day holiday. The Dow Jones Industrial Average rose 9 points to 8,342, while the Nasdaq composite fell 4 points to 1,335.

Lynn Franco, director of the Conference Board's consumer research center, said, "The major factor dampening consumers' spirits has been the rising unemployment rate and the discouraging job outlook."

"Weak retail sales over the holidays clearly reflect the current mood of consumers," Ms. Franco said.

"Until there is an improvement in labor market conditions, there is not likely to be a significant upturn in consumer confidence," she said.

Nationwide unemployment was 6 percent in November, matching an eight-year high set in April, and some economists believe it could rise as high as 6.5 percent by the middle of 2003.

The Conference Board's index, based on a monthly survey of 5,000 U.S. households, is closely watched 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 outlook for jobs was particularly grim, with 20.2 percent of consumers saying they expect fewer jobs to open up in the next six months, up from 18.8 percent in November. Those expecting more jobs fell to 15.1 percent from 15.4 percent.

Income expectations were dour, with 18.7 percent of consumers anticipating a rise in their incomes, down from 19.4 percent a month ago.

The Conference Board report showed waning optimism about current economic conditions, too.

The number of consumers rating conditions as "good" fell to 14.6 percent, down from 16.1 percent in November, while the number sizing up the conditions as "bad" remained steady at 26.0 percent, the Conference Board said.

On the positive side of the ledger, the number of consumers expecting an improvement in business conditions in coming months grew to 20.8 percent from 20.3 percent a month earlier.

Respondents who held the opposite view declined to 11.0 percent, down from 11.3 percent in November.

Sign up for Daily Newsletters

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