Consumers Still Fighting Jitters

Don Hogsett, Staff Staff, July 3, 2006

Staging a modest rally after a major slide the month before, consumer confidence edged up 1.0% during June to a reading of 105.7 as Americans say they feel better about business conditions looking six months ahead than they do about what's happening now, The Conference Board (CB) reported. On a persistent and worrisome note, consumers feel worse about what's going on now in the economy, which the CB said could point to a slowdown during the back half of the year.

Though managing a modest rally, the June reading won back only a fraction of the steep 4.6% fall-off during May, and the widely watched bellwether of future consumer spending remains 3.7% beneath the April reading of 109.8, which marked a 13-month high in the index.

“The slight bounce-back in confidence this month was a result of the moderate improvement in consumers' expectations,” said Lynn Franco, director of the CB's Consumer Research Center. “Despite the uptick, consumers remain concerned about the short-term outlook.”

She said the part of the index measuring current conditions “lost ground for a second consecutive month, a signal that the economy is shifting into lower gear heading into the second half of this year.”

The portion of consumers claiming conditions are 'good' declined to 26.8% from 28.5% during May. Those claiming conditions are 'bad' eased to 14.9% from 15.2%.

Views of the labor market and jobs outlook were mixed. The number of consumers who think jobs are 'plentiful' dropped to 28.1% from 29.1% a month ago, while the number who think jobs are 'hard to get' decreased slightly, to 19.9% from 20.2%.

Buying plans in June
Plans to purchase over the next six months

Source: The Conference Board
Homes 3.4
Carpets -12.0
Cars -14.3
Major appliances -11.0
Vacation -5.0

Confidence by region

Region % change
Source: The Conference Board
New England -1.6%
Middle Atlantic 5.1
East North Central 2.5
West North Central 1.0
South Atlantic -3.6
East South Central 3.3
West South Central 3.8
Mountain 10.0
Pacific 3.3

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