Americans’ worries about job security flared up in September, causing a widely watched barometer of consumer confidence to fall unexpectedly and raising more concern about the upcoming holiday shopping season.
The New York-based Conference Board, a private research group, said that its Consumer Confidence Index dipped to 53.1 in September, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had expected a reading of 57.
The index ? fueled by signs that the economy might be stabilizing ? had enjoyed a three-month climb since hitting a historic low in February of 25.3 but has been bumpy since June as rising unemployment has caught up with shoppers.
A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.
Economists watch consumer sentiment because spending on goods and services for consumers, including housing and health care, accounts for about 70 percent of U.S. economic activity by federal measures.
The Conference Board’s Present Situation Index, which measures consumers’ current assessment of the economy, declined to 22.7 from 25.4. The Expectations Index, which measures consumers’ outlook over the next six months, dipped to 73.3 from 73.8 last month.
“While not as pessimistic as earlier this year, 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 big concern is the job market. Economists surveyed by Thomson Reuters project job losses slowed in September. On average, they predict 180,000 were lost this month, down from 216,000 in August. But Labor Department figures to be released this Friday are projected to show unemployment ticking up to 9.8 percent in September from 9.7 percent in August.
The weak job market, along with tight credit, has led shoppers to limit spending and focus on discounts when they do buy. Even those not worried about losing a job or finding a new one are embracing frugal behavior, buying only necessities and using more coupons.
Economists expect holiday sales to be at best flat from a year ago, the weakest holiday season since at least 1967 when the Commerce Department started collecting the data.
“Shoppers’ habits have changed,” said Frank Badillo, senior economist at consulting group TNS Retail Forward. “They remain focused on cutting back and trading down to discount retailers and to lower-priced brands. All of those behaviors are going to be enforced over the holidays.”
Badillo projects sales for October through December won’t change from last year, compared with the 4.5 percent decline last year from the year before.
The consumer confidence survey was sent to 5,000 households and had a cutoff date of Sept. 22.
The survey showed that consumers’ appraisal of the job market was less favorable than the previous month. Those claiming jobs are “hard to get” increased to 47.0 percent from 44.3 percent, while those claiming jobs are “plentiful” decreased to 3.4 percent from 4.3 percent.
Copyright 2009 The Associated Press.