Consumer confidence index at 5-year low
The Conference Board's measure falls in April amid concerns about employment and business activity.
NEW YORK (CNNMoney.com) -- A key measure of consumer confidence slipped in April to the lowest level in five years, as Americans worry about their jobs and the level of business activity.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 62.3, the lowest level since March 2003, from a revised 65.9 in March. Analysts had expected the index to decline to 61, according to a consensus compiled by Briefing.com.
The index has now declined for four months in a row.
Consumers who feel that business conditions are "bad" increased to 26.7% from 25.5%, while those claiming business conditions are "good" eased to 15.3% from 15.6% last month.
Consumer sentiment is extremely important to the potential recovery of the sagging U.S. economy. Personal consumption is a record 72% of gross domestic product (GDP), according to Christian Menegatti, lead analyst for RGEMonitor.com, an online economic research company.
According to Menegatti, U.S. consumers are responsible for a higher percentage of their country's GDP than any other country in the world.
"Consumer sentiment will be fundamental to understand what the developments will be in the future of the economy," he said. Stimulus checks will help consumers a little bit in the second and third quarters of this year, but that is only a temporary fix, Menegatti said.
The job market
"Not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns," said Lynn Franco, Director of The Conference Board Consumer Research Center, in a statement.
Consumers' perspective of the labor market was also more pessimistic than last month. The percentage of consumers saying jobs are "hard to get" rose to 27.9% from 24.5%, while those claiming jobs are "plentiful" declined to 16.6% from 19.2%.
"The percentage of respondents intending to take a vacation over the next six months has fallen to a 30-year low, another sign of consumers turning more cost conscious," said Franco.
The present situation Index decreased to 80.7 from 90.6, according to the Conference Board.
In a related survey that was published last week, the University of Michigan's survey showed consumer confidence sinking to its lowest level since 1982. The survey's index of consumer sentiment fell to 62.6 in April.
Consumers are a little more optimistic about the future, according to the report by the Conference Board. The expectations index rose to 50.1 in April from 49.4 in March.
Other numbers looking ahead at the future were more mixed. Consumers expecting business conditions to worsen over the next six months increased to 27% from 26%, but those anticipating business conditions to improve increased to 10.1% from 8.6% in March.
"I don't think that the consumers are very optimistic and I don't think there is very much room for the U.S. consumer to be optimistic," said Menegatti. He said incomes are decreasing while the rate at which home values are decreasing is accelerating.
Those expecting fewer jobs in the coming months increased to 32.8% from 29.3%, while those anticipating more jobs increased to 9% from 8%. The proportion of consumers expecting their incomes to increase declined to 15.1% from 16.1%.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households, conducted for The Conference Board by TNS. The index uses 1985 as the benchmark year when the index stood at 100.