(AP:NEW YORK) Americans confidence in the economy fell the most in eight months as worries about the weak jobs, housing and stock markets continue to rattle them.
The Conference Board, a private research group, said on Tuesday that its Consumer Confidence Index now stands at 64.9, down from a revised 68.7 in April.
The May figure, which represents the biggest drop since October 2011 when the measure fell about 6 points, shows that consumers need more encouraging news before their concerns start to dissipate. Despite easing gas prices, Americans continue to be concerned about slow hiring, declining home values, big drops in the stock market and a worsening European economy that they fear will negatively impact the U.S.
"Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook," said Lynn Franco, director of economic indicators at The Conference Board.
Consumer confidence is widely watched because consumer spending accounts for 70 percent of economic activity. May's figure is significantly below the 90 reading that indicates a healthy economy. The measure hasn't been near that level since December 2007. But the latest reading is still well above the 40 figure reached last October and the all-time low of 25.3 in February 2009.
The consumer confidence measure has zigzagged so far this year, dropping in January, rising in February and holding nearly steady after that. Analysts were hoping a slight rise in May would give some credence to the idea that the economy is stabilizing.
Instead, the data, which was based on a survey conducted from May 1 through May 16 with about 500 randomly selected people nationwide, suggests that "the pace of economic growth in the months ahead may moderate," said Franco, with The Conference Board.
Mark Vitner, an economist at Wells Fargo, said May's reading is disappointing, but consistent with the sluggish economic recovery so far.
"In some ways, it's a microcosm of the whole economic recovery," he said. "Every once in a while hopes are raised that things are getting better and then the bottom seems to fall out again."
Analyst say the dismal job market is what keeps Americans from being confident. Indeed, U.S. job growth remains inconsistent. Hiring picked up earlier in the year, but slowed in March and April, suggesting the economy's early-year momentum faded in early spring. Economists say a warm winter led employers to move up some hiring and accelerate other activity that normally wouldn't occur until spring.
A clearer picture of the jobs market will emerge on Friday, when May employment figures are due out. The unemployment rate is expected to remain at 8.1 percent for May with an increase of 160,000 jobs, according to FactSet. That's above April's gains but below the growth pace set this winter.
Adding to Americans' job woes, the stock market in May is on track for its worst month since last September. The S&P 500 is down 4.6 percent for the month. But on Tuesday, The stock market appeared to shrug off the report. The Dow Jones industrial average was up 110 points when the report was released at 10 a.m., and climbed 20 points higher after it came out.
That indicates investors may be more confident in the economic recovery than consumers, said John Lonski, chief economist of Moody's.
"Financial markets are giving short shrift to the drop in consumer confidence," Lonski said.
Meanwhile, recent signs that an economic slowdown is spreading beyond Europe to fast-growing countries like China has raised fears that U.S. companies could pull back on hiring as demand weakens for their products. The housing market also is still weak, and many consumers are seeing their retirement plans shrink as stock prices fall.
Conversely, shoppers are getting some relief at the gas pump. Gasoline has dropped 27 cents per gallon since early April. The national average was $3.67 per gallon as of the start of the Memorial Day weekend on Friday; some experts say it could fall as low as $3.50 by July 4.
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Could it be that the vulture capitalists in the U.S. are holding back their new investments to try to assure that Obama will be defeated if they can make the economy look bad?
Carolyn lets not forget that capalism is at the roots of this country and the reason this is the greatist country there is.Socialism and comunism doesnt work in the long run for the people.Look at Grease and the Eurozone.Russia Argentina and Cuba to name a few.In the near future this keynesian experiment will fail things are going to get bad for a lot of people when the lender of last resort runs out of money to print.I wish this wasnt true but in my life time Im 45 ive seen the decay of capitolism in this country.When washington intervenes with the natural flow of the markets it always ends badly.Im just a working stiff like a lot of people (automechanic)so theres not much I can do about washing ton except vote.In the meantime I have four little capitolists that im raising and I teach them not to ask what the government can do for them but what they can do for their country.These capitolists all work and are exelent students in school dispite the high unemployment rate for their age bracket they choose to work and not occupy wall street.Irealy dont have a problem with the occupiers theyre exersizing their freedom of speech i actually feel a little sympothy for them they are so confused and dont realize the government is the root of the problem and has strayed grossly from its path. CAPITOLIST IN WAITING ROBERT CONNOLLY
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Robert
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