Americans, worried about jobs and the sluggish economic recovery, are losing confidence, causing a widely watched index to tumble in June and raising concerns about consumer spending in the critical months ahead.
The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting 62.8 for June.
June’s reading marked the biggest drop since February, when the index fell 10 points. The index had risen for three straight months since then.
Both components of the index – one that measures how consumers feel now about the economy, the other that assesses their outlook over the next six months – dropped. The Present Situation Index decreased to 25.5 in June from 29.8 in May. The Expectations Index declined to 71.2 from 84.6.
“Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence,” said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement. “Until the pace of job growth picks up, consumer confidence is notly likely to pick up.”
Stocks extended their losses after the release of the report. The Dow Jones industrial average fell 240 points to 9,898 at midday.
The index had been recovering fitfully since hitting an all-time low of 25.3 in February 2009. Still, the reading was far below what’s considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.
Economists watch the number closely because consumer spending including health care and other major items, accounts for about 70 percent of U.S. economic activity.
– Associated Press