Consumer confidence dip is bad holiday omen

Index of consumers' moods declines surprisingly in September, highlighting concerns about weak retail sales at year end.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff reporter

When will you know that an economic recovery is underway?
  • When the Dow tops 10,000
  • When GDP turns positive
  • When job growth resumes
  • It's already started

NEW YORK (CNNMoney.com) -- A key measure of consumer confidence fell in September, after a gain in the previous month, raising concerns about retail sales in the upcoming holiday season, a research group said Tuesday.

The Conference Board, a New York-based business research group, said its Consumer Confidence Index fell to 53.1 in September from an upwardly revised 54.5 in August.

Economists were expecting a reading of 57, according to a Briefing.com consensus survey.

"Consumers remain quite apprehensive about the short-term outlook and their incomes," said Lynn Franco, director of the Conference Board Consumer Research Center. "With the holiday season quickly approaching, this is not very encouraging news."

The index component that measures consumers' assessment of the present situation fell to 22.7 from 25.4. The expectation index, which gauges consumers' outlook over the next few months, dropped to 73.3 from 73.8 last month.

The percentage of consumers saying that jobs are currently "hard to get" rose to 47% from 44.3%, while the percentage of those expecting a difficult job market in the months ahead inched lower to 17.9% from 18%.

"Consumers are still very concerned about employment conditions," said Mark Vitner, an economist at Wells Fargo.

After falling to an all-time low in February, the overall index has been trending higher as more upbeat economic news helped improve consumers' moods. But the weak job market continues to weigh on consumer confidence and the measure remains at historically low levels.

An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

Retail concerns: The lower reading doesn't bode well for the nation's retailers, who make more than half of their annual profit during the holiday season.

"This year consumers have less income available to spend and credit is tighter," Vitner said.

Overall retail sales surged in August, but the gain was fueled by a temporary government program aimed at boosting car sales. Sales excluding autos were up modestly after a slight decline in the previous month.

The success of the Cash for Clunkers program shows that consumers are responding to incentives, Vitner said. But retailers have been battling slumping sales for several months and may not have the resources to offer big holiday deals.

"I'm not sure retailers are in good shape to offer incentives to get people to go out and spend," Vitner said.

The government will report on September retail sales Oct. 14.

Economy: Tuesday's report, which is based on a survey of 5,000 households, is closely watched because consumer spending makes up the bulk of economic activity in the United States.

On Tuesday, the government will release its final reading on second-quarter gross domestic product.

Economists surveyed by Briefing.com believe GDP, the broadest measure of economic activity, fell at an annual rate of 1.2% in the second quarter. That's a slightly sharper decline than the previously reported 1% drop, but is an improvement over the 6.4% contraction in the first quarter. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
6 luxury getaways to escape your digital life Step away from your smartphone. No Facebook or Twitter here. These are six places where luxury travel agents send clients looking to unplug and experience the ultimate digital-detox getaway. More
Most reliable cars - Consumer Reports These cars, trucks and SUVs scored best in the magazine's latest survey of vehicle owners. More
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.