Tags: Consumer Confidence Unexpectedly Falls on Job Fears

Consumer Confidence Unexpectedly Falls on Jobs Outlook

Tuesday, 28 Dec 2010 10:10 AM

Confidence among U.S. consumers unexpectedly fell in December, a sign that the biggest part of the economy will struggle to sustain momentum into 2011.

The Conference Board’s confidence index decreased to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News and down from a revised 54.3 in November, figures from the New York-based research group showed today. The share of Americans saying jobs were hard to get climbed to a 10-month high.

Less confidence raises the risk that spending, which posted the biggest gain during the holidays in five years, will cool. Federal Reserve policy makers have reiterated they will continue to buy Treasury securities in a bid to keep interest rates low, boost growth and cut unemployment.

Confidence “is certainly a long way from normal,” Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “I don’t think we’re going to get back to normal for quite some time, maybe 2012.”

Stocks erased earlier gains after the report. The Standard & Poor’s 500 Index fell 0.1 percent to 1,256.94 at 10:10 a.m. in New York as the drop in confidence offset optimism over gains in holiday spending. Treasury securities fell, pushing the yield in the benchmark 10-year note up to 3.39 percent from 3.33 percent late yesterday.

Unexpected Drop

The median forecast, based on a survey of 61 economists, projected confidence would increase to 56.3. The Conference Board revised the November figure to 54.3 from a previous estimate of 54.1. Projections ranged from 53 to 60. The index averaged 96.8 during the last economic expansion that ended in December 2007.

Today’s report stand in contrast to preliminary figures from Thomson Reuters/University of Michigan which showed sentiment climbed to a six-month high in December.

A report earlier today showed home prices dropped more than forecast in October, a sign housing will remain a weak link recovery accelerates into the new year. The S&P/Case-Shiller index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg.

The Conference Board’s measure of sentiment about present conditions decreased to 23.5 in December from 25.4 a month earlier. The gauge of expectations for the next six months fell to 71.9 from 73.6 in November.

Wary Over Jobs

The percent of respondents expecting more jobs to become available in the next six months decreased to 14.3, the fewest since July. The proportion of people who expect their incomes to rise over the next six months fell to 9.9 percent from 11.1 percent.

The share of consumers who said jobs are currently plentiful fell to 3.9 percent this month, while those who said jobs are hard to get increased to 46.8 percent, the most since February.

Employers added 951,000 workers to payrolls in the first 11 months of the year, according to figures from the Labor Department. December data are due Jan. 7.

The gains haven’t been large enough to reduce unemployment, which was at 9.8 percent last month after finishing 2009 at 10 percent.

President Barack Obama on Dec. 17 signed into law an $858 billion bill that extends for two years Bush-era tax cuts for all income levels, continues expanded jobless insurance benefits to the long-term unemployed for 13 months and reduces payroll taxes during 2011.

Spending Improves

Some Americans are more willing to make some big-ticket purchases. Car sales in November rose to a 12.26 million unit pace, the highest since the government’s cash-for-clunkers program in August 2009, industry data showed this month. Demand over the past three months is the strongest in two years.

Rising confidence is helping lift purchases of so-called big-ticket goods. Ford Motor Co. said U.S. auto sales in December are running at a 12 million unit annual rate, and forecast sales may rise to almost 13 million next year.

“We have a high degree of confidence that 2011 is going to be a stronger sales year,” George Pipas, Ford’s sales analyst, said in a Dec. 20 briefing with reporters in Dearborn, Michigan, where the company is based. “We’re a whole lot better off than we were a year ago.”

Retailers’ 2010 holiday sales jumped 5.5 percent for the best performance in five years as shoppers snapped up clothing and jewelry at stores like Macy’s Inc. and Tiffany & Co. Sales rose to $584 billion from Nov. 5 through Dec. 24, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include Internet sales and exclude automobile purchases.

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Headline
Confidence among U.S. consumers unexpectedly fell in December, a sign that the biggest part of the economy will struggle to sustain momentum into 2011. The Conference Board s confidence index decreased to 52.5, lower than the most pessimistic forecast of economists...
Consumer Confidence Unexpectedly Falls on Job Fears
776
2010-10-28
Tuesday, 28 Dec 2010 10:10 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved