U.S. Economy Consumers Lose Confidence Where are the jobs?
U.S. Economy: Consumers Lose Confidence "Where are the jobs"? Mounting gloom over the outlook for jobs and wages caused American consumers to lose confidence in September, indicating spending will take time to recover.
The Conference Board's sentiment index declined to 48.5 this month, lower than the median forecast of economists surveyed by Bloomberg News and the weakest level since February, according to figures from the New York-based private research group today. Another report showed home prices cooled, hurt by a slump in sales following the end of a government tax incentive.
Household purchases, which account for about 70 percent of the world's largest economy, may be constrained by a jobless rate this is projected to average more than 9 percent through 2011. Best Buy Co. is among companies planning to use promotions to spur sales during the year-end holidays in order to overcome shoppers' somber moods.Consumers "certainly are worried about jobs," said David Sloan, a senior economist at 4Cast Inc. in New York. They "are facing considerable headwinds.
"The median forecast of 75 economists surveyed projected the index would drop to 52.1. Estimates ranged from 48 to 55. The gauge averaged 96.8 during the economic expansion that ended in December 2007.Home prices in 20 cities rose at a slower pace in July from a year earlier, a report from S&P/Case-Shiller showed. The group's index of property values increased 3.2 percent from July 2009, the smallest year-over-year gain since March.
Credit's Influence The gauge is a three-month average, which means the July data are still being influenced by transactions in May and June that may have benefitted from a tax break worth as much as $8,000. Sales contracts had to be signed by the end of April and initially closed by June in order to qualify for the credit. The closing deadline has since been extended to the end of this month.Unemployment, a lack of confidence and mounting foreclosures will probably weigh on the housing market for the rest of the year.
"Now that we're getting data that's starting to show some post-tax credit information, we're beginning to see some weakness on the surface," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in Washington. "Sales have come off and the concern is that you're going to see prices follow."Stocks rose, erasing losses sustained after the reports, as investors speculated the Federal Reserve will buy debt to buoy the economy.
The Standard & Poor's 500 Index climbed 0.4 percent to 1,147.7 at the 4 p.m. close in New York. The yield on the 10- year Treasury note declined to 2.46 percent from 2.53 percent late yesterday.Income OutlookThe Conference Board's measures of present conditions and expectations for the next six months both dropped, today's report showed. Fewer respondents thought more jobs would become available and the share of those who expected incomes to rise fell to the lowest since February.
Best Buy, the world's largest consumer-electronics retailer, said mobile phones, Internet-connected televisions and tablet computers such as Apple Inc.'s iPad will be among its top-selling items this holiday season.The Richfield, Minnesota-based company released its predictions today after conducting an online survey of almost 1,000 people in August. Best Buy plans to spur sales of phones with a promotion that will run on Fridays, starting Oct. 1, Mike Vitelli, executive vice president, told reporters in New York.
"We know it is a tough environment out there," Chief Executive Officer Brian Dunn told reporters. "It will be hard fought."Less OptimisticThere is reason for consumers to worry about jobs.
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