- The Washington Times - Tuesday, October 31, 2006

NEW YORK (AP) — Wages and benefits are rising at the fastest pace in almost two years, but Americans are still so worried about jobs that their confidence in the economy waned in October, a report yesterday showed.

Economists say consumers seem obsessed with news about job losses at auto plants and other manufacturers, but aren’t seeing the real picture — a steady labor market.

“I think there is enough negative news on the employment front to offset the good stuff that is happening,” said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis. Mr. Thayer noted that press reports on outsourcing as well as layoffs among auto workers have distorted consumers’ view of the job market.

According to a report from the Conference Board yesterday, consumer confidence edged down to 105.4 from a revised 105.9 in September, as job worries offset the benefits of falling gasoline prices. Analysts had expected a reading of 107.8.

In contrast to the consumer-confidence data, the Labor Department reported that its Employment Cost Index was up 1 percent in the third quarter, led by a big jump in the cost of employee benefits such as health insurance and pensions.

It was the biggest quarterly increase since a similar 1 percent rise in the second quarter of 2004. The index rose 0.9 percent in the April-June period.

Instead of rising wages, which Americans may be socking away in savings instead of spending, they have been fixated on job cuts in recent months from major household names such as chip maker Intel Inc., Goodyear Tire & Rubber Co., Ford Motor Co. and AOL, the Time Warner Inc. online unit formerly known as America Online.

“October’s dip in confidence was prompted by consumers’ mixed assessment of present-day business conditions and a less favorable view of the job market,” said Lynn Franco, director of the Conference Board Consumer Research Center. “Consumers’ short-term expectations posted a slight improvement, but the outlook for the labor market remains mixed.”

The private research group’s Present Situation Index, which measures how shoppers feel now about economic conditions, fell to 124.7 from 128.3. The Expectations Index, which measures consumers’ outlook over the next six months, rose to 92.6 from 91.

The consumer-confidence report — derived from responses through Oct. 24 to a survey mailed to 5,000 households in a consumer-research panel — showed that labor market conditions were less positive than in September. Consumers saying jobs are “plentiful” declined to 25.8 percent from 26.2 percent. Those saying jobs are “hard to get” increased to 22 percent from 20.9 percent in September.

The outlook for the labor market, however, was mixed. Those expecting more jobs to become available in the coming months edged up to 15.2 percent from 14.7 percent, while those anticipating fewer jobs also increased to 17.5 percent from 16.5 percent. The proportion of consumers expecting their incomes to increase in the months ahead edged down to 19.6 percent from 20.2 percent in September.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide