Watch CBSN Live

Confidence In Economy Sags

Continuing job worries drove consumer confidence lower in October for the third consecutive month, a New York-based private research group said Tuesday. The decline was steeper than expected.

The Consumer Confidence Index dropped 3.9 points to 92.8, down from a revised 96.7 in September, according to The Conference Board. Analysts had expected a reading of 94.

The October figure is the lowest since March, when the reading was 88.5. The index had been rising since April, before falling 3 points to 98.7 in August and another 2 points in September.

"Subdued expectations, as opposed to eroding present-day conditions, were the major cause behind October's decline in consumer confidence," said Lynn Franco, director of The Conference Board's Consumer Research Center. "And, while consumers' assessment of the labor market this month showed a moderate improvement, the gain was not sufficient to ease concerns about job growth in the months ahead."

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

The Expectations Index, one component of the Index that measures consumers' outlook over the next six months, declined to 92.0 from 97.7. Meanwhile, The Present Situation index dipped to 94.2 from 95.3.

The Conference Board's indexes are derived from responses received through Oct. 19 to a survey mailed to 5,000 households in a consumer research panel. The figures released Tuesday include responses from at least 2,500 households. The figures for October were revised after all the surveys for that month were tabulated.

Consumers' assessment of overall current conditions was mixed. Those saying business conditions are "good" declined to 21.7 percent from 23.4 percent. Those saying conditions are "bad" edged up to 21.4 percent from 20.4 percent. On the employment front, consumers saying jobs are "plentiful" increased to 17.4 percent from 16.6 percent, while those claiming jobs are "hard to get" eased to 27.8 percent from 28.0 percent in September.

Consumers' outlook for the next six months turned more cautious. Those anticipating conditions to worsen increased to 10.3 percent from 9.4 percent. Consumers expecting business conditions to improve decreased to 20.6 percent from 21.6 percent.

The employment outlook was also more subdued. Consumers expecting fewer jobs to become available in the coming months rose to 18.4 percent from 16.2 percent, while those anticipating more jobs to become available slipped to 16.5 percent from 17.8 percent. The proportion of consumers expecting their incomes to improve in the months ahead dipped to 18.4 percent from 20.0 percent last month.

Stocks were mixed Tuesday as worries about sagging consumer confidence offset investors' relief over a second straight drop in oil prices.

Through the recession of 2001 and the months of weak growth that followed, consumer spending kept the U.S. economy from falling into a deeper slump. Many households accumulated debt in order to keep buying: Fed statistics indicate that from Sept. 2001 to this August, consumer debt increased by nearly 15 percent, from $1.76 trillion to $2.04 trillion.

The economy showed robust growth in 2003 and early this year, then entered what Federal Reserve Chairman Alan Greenspan has called a "soft patch in late spring."

"Consumer spending slowed materially, and employment gains moderated notably after the marked step-up in early spring," Greenspan told Congress in September. He has said signs point to the economy picking up steam again, but recent jobs figures have not shown robust growth.