CONSUMER CONFIDENCE TRENDS DOWN
Byline: Alison Maxwell
WASHINGTON — Consumer confidence fell for the third consecutive month in September and dropped to its lowest level since March, but analysts said the moderation is not a threatening sign.
The Consumer Confidence Index, released Tuesday by the Conference Board, dropped to 134.2 in September from August’s revised figure of 136.0. However, it continues to ride over last September’s index measured at 126.4 and is up 14.9 points from last October, when it hit a slump at 119.3. So far this year, consumer confidence peaked in June at 139. Analysts pinned the index’s recent downward trend on consecutive interest rate increases, stock market value corrections and higher gas prices.
“It’s a continuing moderation in the economy, and it was well anticipated,” said Stephan Thurman, deputy chief economist at the U.S. Chamber of Commerce. “The consumer needed to moderate its torrid pace. This is not to say things are heading down. We’ve just had a really hot, confident economy; now we’re returning to normal. Consumer purchases are still above trend.”
“It’s something to be noticed,” Larry Horowitz, senior economist with Primark Decision Economics, said of the drop. “But we don’t classify it as a big deal, because we’re still sitting at historically high levels. Consumers are just a little more cautious about the future.”
The present situation index, which measures consumers’ immediate economic expectations, rose slightly to 177.0 in September from 176.3 in August. However, the expectations index, which measures consumer confidence for the next six months, fell to 105.7, from 109.2 in August.
The percentage of consumers expecting conditions to worsen in the next six months increased to 7.1 percent from 6.8 percent in August. Those expecting conditions to improve over the next six months dropped to 16.4 percent from 17.5 percent in August.
Further underscoring the consensus that the dropping index does not signal a serious malaise, Lynn Franco, director of the Conference Board’s Consumer Research Center, said, “The latest figure is only five points off the June reading, with consumers generally optimistic about both the economy and job prospects.
“We don’t anticipate any dramatic shifts soon in consumer spending patterns,” Franco added.
“Consumers are not seeing their wealth holdings drop,” Thurman said. “What they’re seeing is they got to the top of the hill and things are in ‘hold’ mode now. They’re tapping on the brakes a bit.”