- The Washington Times - Tuesday, October 25, 2005

NEW YORK (AP) — The outlook for the holiday shopping season turned ominous yesterday as the latest consumer-confidence reading showed Americans even more pessimistic about the economy during October.

Hurricanes, surging gasoline prices and worries about the job market took a further toll on consumer psyches.

A separate report on home sales during September also pointed to consumers’ growing uneasiness.

The Conference Board said its Consumer Confidence Index fell to 85 in October, the lowest level since October 2003 and down from September’s revised reading of 87.5, which had been the sharpest drop in 15 years. Analysts expected an October reading of 88 for the index, which is compiled from a survey of U.S. households.

“Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, [gas] pump shock and a weakening labor market,” said Lynn Franco, director of the private research group’s Consumer Research Center.

She said the “degree of pessimism, in conjunction with the anticipation of much higher home heating bills this winter, may take some cheer out of the upcoming holiday season.”

Meanwhile, the National Association of Realtors said sales of previously owned homes were unchanged in September at the second-highest level on record. However, the group said sales would have fallen without an increase in demand among people left homeless by Hurricane Katrina.

The latest snapshot on consumer confidence comes at a challenging time for the U.S. economy. There are worries about rising prices across the economy, and Federal Reserve officials have said more interest rate increases are coming to keep inflation in check. And while the national job market did not receive a devastating blow from Hurricanes Katrina and Rita, as economists feared, it did lose momentum.

Retailers are already preparing for a difficult holiday season. Although gasoline prices have slipped back from recent weeks, they still are high, and home heating costs are expected to soar this fall and winter, forcing many consumers to budget carefully.

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