January 1, 2003
Continues to Decline
by Barbara Schoetzau
New York -- Concern about
rising unemployment undermined consumer confidence across the United
States in December. The Conference Board, a private business research
group, reports that its monthly Consumer Confidence Index declined
four points in December.
The index has declined for six of the past
seven months. But business analysts had expected consumer confidence
to edge up following a rebound in November.
The survey is based on samplings from 5,000
U.S. households. Lynn Franco, director of the Conference Board's
Consumer Research Center, said worries about current unemployment
rates and the future job market spurred the decline.
"We ask one question about their assessment
of current labor market conditions and we also ask them their expectations,"
Lynn Franco said. "But the current is having a much more negative
impact on the overall confidence level than the expectations.
They are telling us that the labor market
conditions have not improved in the last month. They have gotten
a little worse," Ms. Franco continued. "With that kind
of job apprehension, that tends to impact spending as well. So from
these figures, what we are seeing is that there is not going to
be a dramatic pickup in spending any time soon either."
Ms. Franco said preliminary figures show
that softening consumer confidence took a toll on retail profits
during the key holiday spending season.
"Retailers had anticipated a weak
season so they began discount campaigns earlier and what we are
seeing is that while consumers were out there in numbers and making
the purchases, due to the heavy discounting it is really squeezing
retailers' profit margins," Ms. Franco added. "So while
they may have been buying in bulk, the pricing was kept low to entice
consumers to come into the store and it is not yielding a very favorable
The percentage of consumers who expect
employment to continue to decline rose in December. But consumers
expressed a bit more optimism about business conditions in general,
saying they expect an improvement over the next six months.
to the Editor
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