Consumers aren't just lacking in confidence, they seem to be tapped out.
On Tuesday, The Conference Board said its Consumer Confidence Index for April fell to 62.3, down from 65.9 in March, bringing the index near a five-year low — it hit 61.4 in March 2003 ahead of the U.S. invasion of Iraq. The Present Situation Index dropped to 80.7 from 90.6, while the Expectations Index inched up slightly to 50.1 from 49.4 last month.
"Looking ahead, consumers' outlook for the economy, the job market and their income prospects remains quite pessimistic and little changed from last month. Or, in other words, the glass remains half empty," said Lynn Franco, director of The Conference Board Consumer Research Center.
Franco said that in this month's survey, the percentage of respondents who said they intend to take a vacation over the next six months has fallen to a 30-year low, another indication consumers are becoming more cost-conscious.
As for the results in April, Franco explained the decline was due to another sharp decrease in the Present Situation component of the index. "This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further. And not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns."
April's reading was slightly better than consensus estimates of 61 expected by economists.
Still, even President Bush is admitting the economy is slowing.
In an hour-long question-and-answer session held Tuesday on short notice in the White House Rose Garden, Bush said, "It's a tough time for our economy." He told reporters, "If there was a magic wand to wave, I'd be waving it, of course....But there is no magic wand to wave right now. It took us a while to get to this fix." He said he was open to ideas to address the lackluster economy, even the proposal to suspend taxes on gasoline this summer that is backed by presidential contenders Senators John McCain and Hillary Rodham Clinton.
John Ryding, economist at Bear Stearns, said the "deterioration in the consumers' assessment of the labor market points to another weak jobs report on Friday." He pointed to the decline in the percentage of answers by respondents who said jobs were "plentiful" in April, which fell to 16.6 percent from 19.2 percent last month. Those who said jobs are "hard to get" rose to 27.9 percent from 24.5 percent.According to Ryding, the net "plentiful" less "hard to get" index fell to negative 11.3 percent in April from negative 5.3 percent in March. "During the technical recession period of March 2001 to November 2001, the net jobs reading did not get as weak as this," he noted.
The Labor Department will release its April employment report on Friday, which is expected to indicate a loss of 65,000 jobs. Last month, there was a loss of 80,000 jobs. The unemployment rate is currently at 5.1 percent.
In April, consumers' assessment of current conditions weakened from the prior month. In addition to job concerns, respondents who said business conditions were "bad" rose to 26.7 percent from 25.5 percent, while those who said they were "good" inched down slightly to 15.3 percent from 15.6 percent.
The Conference Board said "consumers' short-term outlook remained quite grim in April." That conclusion was based on the number who expect business conditions to worsen over the next six months, which rose to 27 percent from 26 percent the previous month. The percentage who said they expect business conditions to improve increased to 10.1 percent from 8.6 percent. Even the outlook on the jobs front leaned more toward pessimism. Those anticipating fewer jobs in the months ahead jumped to 32.8 percent from last month's 29.3 percent, while the respondents who said there will be more jobs inched up to 9 percent from 8 percent in March.
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