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News > Jobs & Economy
Job woes slam confidence
Consumer confidence reading sinks to lowest since May on worries about jobs.
August 31, 2004: 12:58 PM EDT

NEW YORK (CNN/Money) - Worries about the job market sent consumer confidence tumbling in August, a research group said Tuesday, in a report that could spell more trouble for the economy ahead.

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The Conference Board, a business research group, said its index of consumer confidence sank to 98.2 from a reading of 105.7 in July. Economists surveyed by had forecast that the index would slip, but just a bit to 103.4. The August reading was the lowest since May and showed the biggest drop since February.

Confidence is an important indicator of consumer willingness to spend, especially on big-ticket items. About two-thirds of the nation's economy is driven by consumer spending.

Analyst said the drop, after four months of gains, was another worrisome sign of slower economic growth that could have an impact on the November elections.

The reading follows much weaker-than-expected employment reports for June and July. The government's August employment report is due Friday.

"The slowdown in job growth has curbed consumers' confidence," said Lynn Franco, director of he Conference Board's Consumer Research Center. "The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail."

Those saying jobs are "plentiful" slumped to 18.1 percent from 19.7 percent, while those claiming jobs are "hard to get" was virtually unchanged at 25.8 percent.

The consumer outlook for the employment market also worsened. The survey found 15.4 percent expecting fewer jobs six months from now, up from 13.5 percent in the July survey. Those expecting more jobs six months from now fell to 16.2 percent from 19.5 percent.

Consumers were also less optimistic about the general business climate. The survey found 23.2 percent who believe business conditions are "good," down from 25.2 percent. Those claiming conditions are "bad" rose to 20.1 percent from 19.1 percent.

Anthony Chan, senior economist for J.P. Morgan Fleming Asset Management, said that the survey confirms that the slowdown in the economic recovery is more pronounced than forecast by many economists earlier this spring. He said the great impact of weak consumer confidence could be what it means for the election than what it means for the economy.

"It's saying this soft patch is a little wider than previously thought," he said. "I think I would be more concerned from a political standpoint. But if we get a good employment report on Friday, these numbers can easily turn around. These numbers can virtually turn on a dime."

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Robert Brusca of FAO Economics said the report is a sign the job market is far weaker than many economists have been willing to recognize.

He said broad consumer attitudes are shaped by their own experience in the employment market, not just their reading of economic data.

"The personal experience is important," he said. "This (survey) tends to confirm we do have a downturn in place. The depth of this index decline is telling and shocking."

The board surveys 5,000 households for its monthly report.  Top of page

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