- The Washington Times - Wednesday, October 31, 2007

NEW YORK (AP) — Consumers are feeling more forlorn about the economy than they have since hurricanes Katrina and Rita battered the Gulf Coast two years ago.

The New York-based Conference Board said yesterday that its Consumer Confidence Index fell to 95.6 from a revised 99.5 in September. It was the lowest reading since 85.2 in October 2005, when gas and oil prices soared after the hurricanes deluged New Orleans and shut down a large portion of the nation’s oil refineries. Analysts expected a reading of 99.5 yesterday.

For retailers, the consumer confidence report, which showed its third monthly decline in a row, heightens worries that the holiday shopping season will be challenging. For investors, it raised concerns that consumers’ growing wariness was another sign that the economy may be slowing too much. Consumer spending accounts for two-thirds of U.S. economic activity.

Souring confidence is “certainly not what retailers want to see going into the holiday season,” said Wachovia Corp. economist Mark Vitner.

Consumers face more hurdles going into the season than they did two years ago, he said.

The Present Situation Index, which measures how shoppers feel now about the economy, fell to 118.8 in October from 121.2 the previous month. The Expectations Index, which measures shoppers’ outlook over the next six months, fell to 80.1 from 85.

Shoppers are contending with a slew of problems: higher food and gas prices, a deepening housing slump and tighter credit, among them.

A report on U.S. home prices yesterday offered little hope prices will recover soon. According to the S&P;/Case-Shiller Index, U.S. home prices fell nationwide in August for the eighth consecutive month.

And while the Federal Reserve is expected to cut interest rates today to soften the impact of housing on the economy, economists say the move probably comes too late for the holiday season, which accounts for 40 percent of retailers’ annual sales.

“Further weakening in business conditions has, yet again, tempered consumers’ assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead,” said Lynn Franco, director of the Conference Board Consumer Research Center.

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

Click to Hide