Layoff fears compromise generally positive view
Home & Textiles Today Staff -- Home Textiles Today, September 3, 2001
Rising unemployment levels continue to unnerve consumers, sending consumer confidence down to its lowest level in four months and raising questions about the direction of consumer spending, a key driver of the nation's economy.
The Conference Board's bellwether Consumer Confidence Index dropped for a second straight month, declining by 1.7 percent in August to a current level of 114.3 from 116.3 in July.
But the picture isn't as muted as it first appears, since most of the key components of the index actually improved during the month. Taking the entire index down in August was the "present situation" index, which measures consumer confidence about current economic conditions. That key index fell 5.5 points, to a level of 145.8 from 151.3 in July, a one-month drop of 3.6 percent.
Looking ahead to the future, consumer confidence actually improved modestly, with the "expectations index," which measures the way consumers feel about conditions six months out, rising to a level of 93.3 from 92.9 in July.
The big hitch in this month's report was the way consumers look at ongoing economic conditions. More families say conditions are "bad" — 14.9 percent vs. 14.6 percent a month ago. And really making them jittery is the jobs outlook. The number who say jobs are hard to get rose to 15.9 percent from 14.1 percent a month ago. And the number who found jobs plentiful weakened to 33.4 percent from 35.6 percent.
"The deteriorating U.S. job market dampened consumer spirits this month," said Lynn Franco, director of The Conference Board's Consumer Research Center. "The nation's employment and unemployment numbers now bear watching, since continued weakness in the job market could translate into slower consumer spending."
Going forward, though, consumers are more bullish. Gauging conditions for the next six months, the number of consumers who expect an improvement in business conditions increased strongly, to 18.9 percent from 17.2 percent in July.
Buying plans were largely unchanged from the month before, with consumers' plans to buy appliances and homes both holding steady. But car buying plans, as expected, dipped to 7.8 percent from 9.4 percent, now that dealer rebates and deals, heavily weighted to the first six months of the year, are drying up.
Consumer confidence by region
|East North Central||-2.0|
|West North Central||-10.4|
|East South Central||-10.9|
|West South Central||-3.1|
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