After three months of improvement, the Conference Board’s Consumer Confidence Index dropped from its August level, surprising analysts who were expecting the upward trend to continue. The August reading was 54.5; September came home at 53.1, well below predictions of a 57 score for the month.
Besides sending a shiver through yesterday’s activity in the stock markets, the unexpected reading led to new worries about spending during the holiday season.
However, the Associated Press noted that most economists are looking for a flat rather than a down holiday, after the 2008 season came in at -4.5%.
Reuters noted that continued weakness in the job market was getting part of the blame for consumers’ pessimism. That was confirmed in a separate survey by Business Roundtable showing 40% of respondents looking at further payroll cuts compared to only 13% expecting to hire in the next six months.
Consumers seem to be getting that message. The Conference Board index number for the phrase “jobs hard to get” rose from 44.3 to 47.0.
Business Roundtable noted that CEOs are taking a conservative approach to staffing despite the fact that better than half think sales will improve soon. 51% expect increases within six months, compared to only 26% looking for a decline. 23% expect flat results.
RBR-TVBR observation: What a vicious cycle. Consumers aren’t going to be truly confident until they feel their job prospects are secure, and won’t spend until that happens. Businesses won’t hire, or even stop cutting jobs, until sales pick up. That reinforces consumer employment insecurity, and so on, and so on.
It seems to us that there have been signs of stabilization – we’re hoping that both consumers and employers will accept moderate improvements in their respective situations as motivation to come out of their shells and doing their bit – whether it be spending or hiring – to get this economy turned around.