Consumers skeptical as June index drops

Don Hogsett, July 8, 2002

With Americans growing increasingly antsy about a weakening job market and short-term economic conditions, and further rattled by reports of corporate malpractice, consumer confidence fell in June to its lowest level in the past four months, The Conference Board reported.

The benchmark indicator slumped by 3.9 percent, to a new reading of 106.4, snapping a four-month string of steady gains that began in February.

"Weak labor market conditions, generally soft business conditions and waning public confidence in questionable business practices have helped erode consumer confidence," said Lynn Franco, director of the business think tank's Consumer Research Center. Still, she emphasized, "latest readings point to continued consumer spending and moderate economic growth."

Buying plans were mixed in June, with consumers planning to buy more major appliances but backing off plans to buy big-ticket items like cars and homes. In an indication that plans to furnish homes are holding steady after sliding somewhat in recent months, consumer buying plans for carpets remained unchanged at 5.7 percent.

"Consumers' short-term expectations were less optimistic than in the prior survey," said Franco. "The percentage of respondents anticipating an improvement in business conditions declined from 24.9 percent to 23.6 percent. Those expecting conditions to worsen rose marginally from 6.8 percent to 7.0 percent. Also, fewer consumers expect more jobs to become available in the next months, 20.1 percent in June vs. 21.2 percent in May, while respondents expecting fewer jobs to become available rose from 13.6 percent to 14.2 percent."

Consumer confidence by region

REGION % CHANGE
New England -4.3
Middle Atlantic -11.6
East North Central -10.9
West North Central 9.1
South Atlantic 6.2
East South Central 8.3
West South Central -0.1
Mountain -6.4
Pacific -8.9


Consumer Buying Plans — June
plans to purchase over the next six months

Source: The Conference Board
Carpets 0.0%
U.S. vacation -0.7
Cars -3.8
Foreign vacation -6.4
Major appliances -8.3


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