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Consumer Confidence: 2-Month Dip

Economy Sizzles, UP,
AP / CBS
Consumer confidence declined in September for the second consecutive month, a New York-based private research group said Tuesday.

The Consumer Confidence Index fell 1.9 points to 96.8 from a revised reading of 98.7 in August, according to The Conference Board. Analysts had expected a reading of 99.5.

"The recent declines in the index were caused primarily by a deterioration in consumers' assessment of employment conditions," said Lynn Franco, director of the organization's Consumer Research Center. "Soft labor market conditions have clearly taken a toll on consumer confidence. Still, expectations for the next six months are virtually unchanged from August."

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

The Present Situation Index, one component of the consumer confidence reading, fell to 95.5 from 100.7 in August. The Expectations Index, which measures consumers' outlook over the next six months, edged up to 97.6 compared with 97.3 last month.

Consumers have been treated to mixed economic news for years.

While the economy grew at a steady clip during 2003 and the first quarter of 2004 — even charging at a 7.4 percent rate in the third quarter last year — it has since cooled, expanding by a mere 2.8 percent in the second quarter of 2004.

And while job growth roared to more than 350,000 jobs created in March, it slowed thereafter, posting only 73,000 jobs in July and 144,000 in August, which fell short of expectations.

Sales of new homes rose by 9.4 percent in August, the Commerce Department said Monday, as mortgage interest rates remained at low enough levels to continue enticing buyers worried about future rate hikes.

Crude oil topped the psychological milestone of $50 per barrel Tuesday for the first time, and a Saudi Arabian oil official said the world's largest petroleum exporter would raise its production capacity by nearly 5 percent in a bid to calm prices.