Job Fears Depress US Consumer Confidence

30 July 2003

While economists’ communal hymnsheet may sing of a rainbow forming behind the nation’s economic cloud, Joe Public is far from convinced, according the latest report from New York-based business research group, the Conference Board.

The closely-watched monthly barometer of consumer confidence revealed a decline in its key index, down from a reading of 83.5 in June to 76.6 – the lowest level recorded in the survey of 5,000 US households since the run-up to the war on Iraq.

Respondents believe jobs are more elusive, their expectations for economic activity slipping in the aftermath of the euphoria that followed the quick US victory in the April war. ‘Jobs are hard to get’, opined 33.1%, the highest proportion since January 1994 when the unemployment rate was 6.6%.

There was just one glimmer of light in the generally downbeat survey, suggesting an upturn in consumer spending in the months ahead: 8.5% of those surveyed said they planned to buy a car in the next six months, the highest proportion since October.

“Consumers are still waiting for a turnaround in labor-market conditions,” commented Conference Board economist Lynn Franco.

In theory, consumers spend less as their confidence in the economic environment falls. But the more sagacious economists are reluctant to read too much into any one month of data given that households have been known to keep spending despite their gloom. This sometimes fuels economic growth even when public confidence sags.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff