NEW YORK — Americans aren’t too sure about today, but they’re feeling progressively better about tomorrow.
With Americans still coping with geopolitical uncertainties abroad and a shaky economy at home, consumer confidence remained virtually flat in June, declining just 0.1 points to 83.5 from a downwardly revised 83.6 in May and ending a string of two consecutive months of increases.
The Conference Board’s monthly survey of 5,000 households provided the second straight monthly decline in the Present Situation Index, to 64.9 from 67.3, but the third consecutive increase in the Expectations Index, which rose to 95.9, its highest reading since last June’s 107.2, from 94.5 in May.
“While consumers’ assessment of current conditions has lost ground since April, expectations for the next six months are up,” Lynn Franco, director of the Conference Board’s Consumer Research Center, said in a statement. “In fact, consumers have grown increasingly optimistic over the last three months. The recent turnaround in the stock market and an easing in unemployment claims should keep consumer expectations at current levels and may signal more favorable economic times ahead.”
John Lonski, an economist with Moody’s Investors Service, said he was encouraged by the smaller-than-expected dip in the monthly index. “The decrease in the current attitudes indicates consumers are not happy with the way things are going today but, because of the rising stock market and the lower interest rates, they sense things will be better tomorrow.
“We have to be pleased with the fact we are holding on to most of the gains in consumer confidence that have materialized since confidence rose sharply in April in response to military success in Iraq. That is reassuring for consumer spending and the American economy,” Lonski said.
Looking ahead, he said that, while he expects business conditions and confidence to stabilize throughout the summer months, there is an opportunity for job creation later this summer and into September, further boosting confidence. For retailers, the economist said companies can expect to see a better showing in same-store sales by the back-to-school season.
Peter G. Glassman, senior domestic economist with Bank One Corp., said the upbeat consumer outlook is a “headlines effect” reflecting the recent bounce in the stock market, a belief in a second-half and 2004 economic turnaround, and the end of the war in Iraq. On the other hand, Glassman said consumers remain concerned their real disposable income hasn’t increased as much as it has in years past.He said that, in the first quarter 2003, real disposable income grew 2.6 percent, compared with a 5.5 percent gain in the fourth quarter of 2002; 2.8 percent in the third; 5 percent in the second, and 3.8 percent in the first quarter.
“Consumers see great times ahead, but at the same time, they are looking at their pocketbooks and thinking they should have been [financially] better off,” he said.
Perhaps they will be in the months ahead. Those anticipating an improvement in business conditions rose to 23.9 percent from 22.8 percent. Consumers anticipating conditions to worsen fell to 9.3 percent from 9.6 percent.
The employment outlook is also more favorable. Those anticipating more jobs to become available in the next six months increased to 19 percent from 17.9 percent, while those expecting fewer jobs eased to 17.3 percent from 17.8 percent. The proportion of consumers anticipating an increase in their incomes edged down to 16.9 percent from 17.1 percent.
Consumers’ assessments of current business conditions are mixed. Those rating present business conditions as “bad” fell to 27.7 percent from 28.4 percent, while those rating conditions as “good” declined to 14.9 percent from 16.1 percent. Labor market conditions also are mixed. Consumers reporting that jobs are hard to get eased to 32 percent from 32.9 percent, while those claiming jobs are plentiful fell to 11.4 percent from 12.3 percent.
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