Tuesday September 25, 11:13 am ET
By Anne D'Innocenzio, AP Business Writer
Consumer Confidence Falls to Lowest in Almost 2 Years As Shoppers Fret
About Jobs, Economy
NEW YORK (AP) -- Worries about jobs and the economy flared in September,
driving a key barometer of consumer sentiment to its lowest level in
nearly two years, a private research group said Tuesday.
The bad news was compounded by a report from the National Association of
Realtors that sales of existing homes declined for a sixth straight
month in August, pushing activity to the lowest point in five years.
The pair of reports rattled Wall Street further as investors got more
evidence of a souring economy. In the first hour of trading, the Dow
Jones industrial average fell 19.43 or 0.14 percent, to 13,739.63.
The New York-based Conference Board said its Consumer Confidence Index
fell to 99.8, an almost 6-point drop from the revised 105.6 in August.
The reading was below the 104.5 that analysts had expected.
It marked its lowest level since a 98.3 reading in November 2005, when
gas and oil prices soared after hurricanes Katrina and Rita devastated
the Gulf Coast.
"Weaker business conditions combined with a less favorable job market
continue to cast a cloud over consumers and heighten their sense of
uncertainty and concern," said Lynn Franco, director of The Conference
Board Consumer Research Center, in a statement. "Looking ahead, little
economic improvement is expected, and with the holiday season around the
corner, this is not welcome news."
The Present Situation Index, which measures how shoppers feel now about
the economy, declined to 121.7 from 130.1 in August. The Expectations
Index, which measures shoppers' outlook over the next six months,
declined to 85.2 from 89.2.
Economists closely monitor confidence since consumer spending accounts
for two-thirds of U.S. economic activity.
The National Association of Realtors reported Tuesday that sales of
existing single-family homes dropped by 4.3 percent in August, compared
to July. Sales at a seasonally adjusted annual rate dropped to 5.5
million units, the slowest pace since August 2002.
Meanwhile, a S&P/Case-Shiller report, also released Tuesday, showed that
the decline in U.S. home prices accelerated nationwide in July, posting
the steepest drop in 16 years. The index of 10 U.S. cities fell 4.5
percent in July from a year ago. That was the biggest drop since July 1991.
Tuesday's reports showing eroding consumer confidence and a further
weakening of housing do not bode well for retailers, who are already
bracing for a challenging holiday season. Merchants have seen spending
slow all year amid falling home prices and higher gas and food bills.
The financial turmoil in August and escalating problems in the credit
market have made economists and retailers more nervous about the
prospects for a decent holiday shopping season.
Two of the nation's leading retailers -- discounter Target Corp. and
home improvement merchant Lowe's Cos. -- both tempered their sales
forecasts on Monday.
While The Federal Reserve's decision last week to cut its interest rate
by half a point was meant to soften the impact of the housing woes on
the overall economy, economists say it won't do much to help spending
this holiday.
A big issue is the job market, which saw its first drop in job creation
in four years in August. Economists expect the job market to add 100,000
jobs in September when the Labor department reports its data on Oct. 5.
Meanwhile, the unemployment rate is expected to inch up to 4.7 percent
from 4.6 percent in July.
