If you're a U.S. consumer, why would you be confident?
Following a string of bad news that threatens the painfully slow economic recovery, consumer confidence fell to a seven-month low in June on continuing worries about high unemployment and stagnating wages, according to a report released Tuesday by a private research group.
The Conference Board's Consumer Confidence Index slipped to 58.5 in June. That's down from a revised 61.7 in May, which marked an almost 6-point drop. "Americans still feel like they're in a recession," said C. Britt Beemer, chairman of America's Research Group. "They feel like they're driving in a car and getting hit by all sides."
A reading of 90 indicates a healthy economy on the index, which measures how Americans feel about business conditions, the job market and the next six months. But the index hasn't approached that level since the recession began in December 2007. In fact, two years after the recession officially ended in June 2009, consumer confidence is still fragile.
"Consumers are growing increasingly worried about the near-term economic outlook," says Mark Vitner, senior economist at Wells Fargo.
Jim Horseman, 55, a railroad engineer from Avon, Ohio, is among those consumers who remain queasy about the economy. He said he needs to buy a new car but is putting it off until next year. "I'm not giving up my money. I'm holding on to my savings," Horseman says. "I feel much safer with my money in the bank making no interest than not having it."
Still, economists had expected the confidence index to edge up because consumers are paying less at the pump. But that didn't boost shoppers' mood.
Consumers had been hurt by rising gasoline prices that neared $4 per gallon in late April and early May, leading many to cut back on spending for everything from televisions to clothes. But since the Memorial Day weekend, gas prices have fallen to a national average of $3.57 per gallon.
Lynn Franco, director of the Conference Board Consumer Research Center, said rising gas prices have a greater impact on the confidence level as they go up than when they fall.