Shaken by layoffs and continued economic weakness, consumers are fast losing faith in the U.S. economy's ability to rebound, according to a report released Tuesday.
Consumer confidence in February fell to its
lowest level in more than four years, undermined by increased
pessimism about jobs and the economy.
The Conference Board reported Tuesday that its Consumer
Confidence Index dropped to 106.8 down from 115.7 in January. It
marked the fifth consecutive drop in the monthly index, which fell
to its lowest point since June 1996.
"The erosion in consumer confidence continues to be fueled by
weakening expectations regarding business and employment
conditions," said Lynn Franco, director of the Conference Board's
Consumer Research Center.
But the economy continues to walk a tightrope, avoiding a plunge
into recession, Franco added.
"While the short-term outlook continues to signal a severe
economic downturn, consumers' appraisal of current economic
conditions suggests we are still undergoing moderate economic
growth and not a recession," she said.
Economist Joel Naroff said the reading on confidence, combined
with the housing figures released Tuesday, show consumers are badly shaken.
"Consumers are seeing all the layoff news, they're hearing all
the doom and gloom comments and they've gotten worried, there's no
question about it," said Naroff of Naroff Economic Advisors in
Consumers continue to be pessimistic about the outlook over the
next six months, the Conference Board said. The percentage of
consumers expecting a pickup in business conditions declined from
13.1 percent to 11.1 percent, while those anticipating conditions
to worsen increased from 15.2 percent to 17.8 percent.
In addition, only 10.2 percent of American consumers expect more
jobs to become available, down from 11.7 percent last month. Those
expecting fewer jobs to become available increased from 21.5
percent to 27.2 percent.
The Conference Board index, based on a monthly survey of some
5,000 U.S. households, is considered a key indicator because
consumer spending accounts for about two-thirds of the nation's
economic activity. The index compares results to its base year,
1985, when it stood at 100.
The Associated Press contributed to this report.