Consumer confidence declined in November for a fourth consecutive month, a private research group reported Tuesday, reflecting doubts about the economy once the holidays are past.
The Conference Board said its Consumer Confidence Index fell to 90.5, down from a revised reading of 92.9 in October, defying market expectations. Analysts had forecast the index would rise to 96.0.
The November figure marks the lowest point in the index since March, when it registered 88.5. The closely watched gauge of consumer sentiment has been in decline since peaking in July.
“With consumers’ assessment of current conditions holding steadfast and intentions to spend for the holiday season up from a year ago, the outlook for retailers is mildly encouraging,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “But looking beyond the upcoming holidays, the continuing erosion in expectations suggests consumers do not feel the economy is likely to gain major momentum in early 2005.”
Economists keep a close watch on measures of consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.
The disappointing confidence figure contradicts some other recent reports showing a business climate and labor market that continue to strengthen.
“I think what it may be showing is simply a lag in confidence,” said Patrick Fearon, an economist with A.G. Edwards & Sons Inc. in St. Louis. “Maybe the recent improvements in the economy just haven’t filtered down enough to where its really having an impact on optimism.”
But another economist, Gina Martin of Wachovia Corp., said while that could be the case, the continuing decline in confidence will probably be reflected in slower spending by consumers in coming months.
“The present situation looks pretty sunny, but there are clouds on the horizon,” Martin said.
The consumer confidence reading was one of two economic reports released Tuesday. In the other, the government said that economy grew at an annual rate of 3.9 percent in the third quarter, better than had been expected.
The drop in the confidence index reflected the mixed mood of the public. A component index tracking consumers’ feelings about the current economy rose to 95.2 from 94.0 last month.
But the Expectations Index, reflecting their outlook, fell markedly to 87.4 from 92.2 in October.
The Conference Board’s readings are based on responses received through Nov. 16 to a survey mailed to 5,000 households. The figures for October were revised after all the surveys for that month were tabulated.
The report said that consumers’ assessment of the current climate varied.
Those saying that jobs are plentiful decreased to 16.8 percent from 17.4 percent, while those claiming jobs are hard to get rose to 28.1 percent from 27.9 percent.
But that was countered by an improvement in views on overall business conditions, with those appraising them as good increasing to 23.0 percent from 21.6 percent. Those who said conditions are bad declined to 20.5 percent from 21.4 percent.
Meanwhile, their appraisal of the future continued to cloud. Those who expect business conditions to worsen in the next six months increased to 11.9 percent from 10.5 percent. The number expecting an improvement declined to 19.3 percent from 20.7 percent.
The number of consumers expecting fewer jobs in the months ahead rose to 19.7 percent from 18.3 percent, while those who expect more jobs was essentially unchanged at 16.8 percent.
Those who expect their incomes to rise in coming months edged down to 18.5 percent from 19.0 percent.