Consumer Confidence continued to fluctuate in June, decreasing from May. The Conference Board's Consumer Confidence Index was 106.4, down 3.9 points from the revised 110.3 in May. This was just over economist's expectations of 106. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence dropped across both portions of the Conference Board index. The Expectations portion of the index, measuring future economic activity, registered 106.9 in June, down nearly three points from May.
The Present Conditions Index, another factor in the total composite index, decreased 5.5 points from 111.2 in May to 105.7 in June. This index is a measure of how consumers perceive the current state of the economy.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in June to 92.4 from 96.9 in May. Both component indices fell. The Expectations Index was 87.9 from 92.7 in May and the Present Conditions portion dropped 4.0 points to 99.5.
Drops in consumer confidence in June further reflect consumer's uncertainties about the future of the economy. Economists cite weak labor market and business conditions as a primary cause for the decline in consumer confidence. In the Conference Board Index, 23.1 percent of consumers surveyed believe jobs are hard to get the highest percentage since 1996. Additionally, economists maintain that consumer confidence is rebounding more slowly than originally expected due to situations such as the continued uncovering of corporate scandals and uncertainty in the Middle East. Further, spent-up demand may curb consumer spending.
Despite this, consumers still stand to benefit financially from rising incomes, rising home equity, lower taxes and mortgage refinancing. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is a critical component for economic recovery. Economists expect consumer confidence to fluctuate as the economy continues to grow moderately for the remainder of 2002.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
