U.S.

Consumer Confidence Slips

By Dan Collins

January 27, 2004 / 11:20 AM EST / CBS MarketWatch

Consumers have turned more cautious after deciding that all the talk of an improving U.S. economy may still be just so much hot air, according to researchers at the University of Michigan.

The consumer sentiment index fell Friday to a reading of 89.6 in early December from 93.7 in November. The decline was unexpected. The consensus forecast of Wall Street economists was for sentiment to improve to 95.6.

Consumer sentiment has risen sharply since hitting a 10-year low of 77.6 in March.

However, consumers cited fewer gains in wages as the primary reason for concern about their personal financial situation in early December.
Growing impatience by consumers for their personal financial situation is typical after an initial surge in confidence tied to a recovering economy, researchers said.

Consumers soon begin to wonder when the improving economy will translate into higher wages or a better job.

"The data make it clear that consumers are counting on more rapid job growth in the months ahead, and without that growth in employment, confidence will quickly wane," the University of Michigan research team said.

In other economic news:

Wholesale prices retreated by 0.3 percent in November, pulled down by falling costs for gasoline, beef and cars, suggesting that the economy's resurgence isn't fanning inflation.

The decline in the Producer Price Index, which measures prices before they reach store shelves, came after prices rose by 0.8 percent in October, the Labor Department said. That jump had unsettled some analysts who worried whether the seeds of inflation were being planted and could take root down the road.

The Commerce Department said the trade deficit soared to $41.77 billion in October. Shopper preference for imports hit a record high, offsetting a sizable gain in exports, including the best showing for sales of farm products in seven years. The October trade imbalance was up 1 percent from a September deficit of $41.34 billion and was the biggest deficit number in five months.