Most Recent Articles On FinancialNEW YORK — After spending with abandon in the first half of the year — especially on luxury items — high fuel costs and weak job growth have consumers facing the second half with trepidation.
For the first time since March, the Consumer Confidence Index fell, to 98.2 from 105.7. The report led investors to pare their holdings in retail stocks, as the S&P Retail Index slipped 0.51, or 0.1 percent, to close at 388.92. Other major indices initially retreated on the news, but then rebounded to finish with mild gains in light trading. The Dow Jones Industrial Average added 51.4 points, or 0.5 percent, to finish at 10,173.92, while the S&P 500 improved 5.09 points, or 0.5 percent, to close at 1,104.24.
The plunge in the consumer confidence reading, combined with a lower-than-forecast Midwest manufacturing report and anxiety over this Friday’s employment report came at an inconvenient time for President Bush and Republicans as they gathered in New York for their convention.
“The slowdown in job growth has curbed consumer confidence,” said Lynn Franco, director of the board’s Consumer Research Center, in a statement. “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.”
The Conference Board’s August reading was not only 7.5 points short of July’s two-year high, but fell well below economists’ forecasts of a more modest dip, to 103.5. The Present Situation Index declined to 100.7 from 106.4 last month and the Expectations Index fell to 96.6 from 105.3, the Conference Board said.
As for employment, consumers describing jobs as “plentiful” fell to 18.1 percent from 19.7 percent a month ago, while those who said jobs were “hard to get” remained essentially flat at 25.8 percent versus 25.7 percent in July.
“No surprises here,” said Richard Hastings, retail analyst and economist at Bernard Sands. “Whenever the Present Situation Index is higher than the Future Expectations Index, as it was in July, that is a warning signal. When that occurs for a few consecutive months, that is a negative indicator.”