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Consumers turn glum in September

/ Source: The Associated Press

U.S. consumer sentiment fell unexpectedly in September, a survey showed Friday, as persistent weakness in the job market, high gasoline prices and the ongoing occupation in Iraq took a toll.

THE UNIVERSITY OF MICHIGAN’S final September index of consumer sentiment fell to 87.7, below economists’ forecasts of 88.5, from 89.3 in August. A preliminary reading on the survey mid-month came in at 88.2.

Consumer sentiment is still well above the nine-year low of 77.6 reached in March at the start of the Iraq war and above its average for the last 12 months.

But the recovery in confidence since the end of major hostilities has fallen flat as the ongoing human and financial costs of the post-war occupation add up. Consumer confidence has also been undermined by the weak jobs market.

“This report, in conjunction with the confidence figures from the Conference Board, will probably underscore the concern with regard to the labor market,” said Kathleen Stephenson, director of global economics with Credit Suisse First Boston.

According to a Labor Department report Thursday, new claims for jobless benefits are falling to the point where the U.S. economy might finally be creating jobs.

But high-profile mass layoffs, especially in the manufacturing sector, have fed worries about job security. Tobacco maker R.J. Reynolds and iconic bluejean company Levi Strauss are among those announcing big job cuts.

The survey’s current conditions index, which tracks consumers’ attitudes about their present financial situation, dropped to a final reading of 98.4 from 99.7 in August. The expectations index, which gauges the 12-month outlook, fell to 80.8 from 82.5 in August.

The University of Michigan consumer sentiment survey is based on telephone interviews with 500 U.S. households over the course of the month on personal finances and business and buying conditions. It is released only to paying customers.

The preliminary survey, released about midway through the month, is based on the first 250 interviews.

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