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News > Economy
Consumer confidence dips
September 28, 1999: 12:39 p.m. ET

Index drops for 3rd consecutive month, but Americans still 'generally optimistic'
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NEW YORK (CNNfn) - Consumer confidence dropped slightly in September for the third consecutive month, reflecting jitters over declining stock prices and rising interest rates, economists said Tuesday.
     The index -- based on a representative survey of 5,000 U.S. households -- dipped to 134.2 from a revised reading of 136.0 a month earlier, according to the Conference Board, the New York-based business research group that compiles the data. The latest reading also fell below the consensus estimate of analysts polled by Reuters, who had forecast the September index would rise to 136.3.
     Despite the slippage, consumer confidence levels remain near record highs. The index hit 139 in June, the strongest in more than 30 years.
     "It's still fairly high by historical standards," said Rosanne Cahn, chief economist at Credit Suisse First Boston. "There's starting to be some influence of higher interest rates and the more volatile stock market, but not much influence yet."
     The latest consumer confidence data are not likely to have any direct influence on the Federal Reserve in its Oct. 5 meeting on whether to raise short-term interest rates for the third time this year, said David Orr, chief economist at First Union Bank.
     But, he said, the underlying factor pulling down consumer confidence -- weaker stock prices -- will be on the minds of Fed policymakers. Last week, the Dow Jones industrial average sank more than 500 points, its largest weekly point drop ever, amid concerns about valuations and the dollar's drop against the Japanese yen.
     The index, which was set at a level of 100 in the base year of 1985, is considered an important economic gauge. Consumers power two-thirds of the U.S. economy through their purchases of goods, services and investments.
     Consumer confidence about current conditions rose to 177.0 in September from a revised 176.3 the prior month, the Conference Board said.
     The expectations outlook dropped to 105.7, from a revised 109.2 in August. That reading likely reflects the recent weakness in the stock market, the interest rate increases by the Fed aimed at cooling off the economy, higher mortgage rates and concern about the possibility of further increases in gas prices, Orr said.
     But these factors are not likely to have a major influence on consumer confidence as long as unemployment remains low, Orr said.
     "The bottom line is that so long as the unemployment rate stays down there won't be any serious trouble with consumer spending," he said.
     The survey found that 12.5 percent of respondents believe jobs are "hard to get," down slightly from 12.7 percent in August. But, 48.2 percent of respondents said jobs are plentiful, down from 49.4 percent last month.
     The survey also found that 7.1 percent of respondents said they expected business conditions to worsen in the next six months, while 16.4 percent expected them to improve. The rest said they expected no change. Those figures were more pessimistic than in August.
     But despite the latest data, consumers are "generally optimistic about both the economy and job prospects," said Lynn Franco, director of the Conference Board's Consumer Research Center. "We anticipate no dramatic shifts soon in consumer spending patterns."Back to top
     -- from staff and wire reports

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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: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. 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 2018 and/or its affiliates.