Consumer Confidence Index



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Consumer Confidence Plunges in June

Tuesday, June 29, 2010 - U.S. consumer confidence was rocked in June as Americans fretted about the weak jobs picture and more turbulence in the financial markets, a new report showed on Tuesday.

The key measure of consumer confidence fell in June, an industry group said Tuesday, after rising for three consecutive months.

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 the reading to dip slightly to 62.8.

Economists had expected the index to have fallen to 62 in June, according to consensus estimates from Briefing.com.

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 not likely to pick up."

Stocks extended their losses after the release of the report. The Dow Jones Industrials fell 221.28 points to 9,917.24. The report plays into fears on Wall Street that consumers will once again cut back on spending, hurting the already-fragile economic recovery. Consumer discretionary stocks like Saks (SKS) and Tiffany (TIF) fell sharply.

The Conference Board survey is based on a random survey of consumers sent to 5,000 households from June 1 to June 22.

consumer-confidence graph



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.

Economists already had believed confidence will remain weak for at least another year because of stubbornly high unemployment. But a batch of economic data -- from disappointing job figures in May to dismal housing numbers -- is increasing worries that the road to recovery could be rockier than anticipated. Amid such concerns, the Dow Jones Industrials has fallen 9.5 percent since late April.

"We're concerned about the strength of the economic recovery from here," said Richard Hastings, macro and consumer strategist with Global Hunter Securities. "That would suggest weaker consumer confidence for the next few months” said Hastings.

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