Consumer Confidence Drops in Nov.

Tuesday, November 28th 2000, 12:00 am

By: News On 6

NEW YORK (AP) â€” Consumer confidence fell in November to its lowest level in more than a year, yet another sign the economy is slowing and that consumers are becoming increasingly worried about the unresolved presidential election, the stock market decline and higher heating bills this winter.

The New York-based Conference Board said its Consumer Confidence Index now stands at 133.5, a modest drop from the revised 135.8 reported in October and a significant decline from the record high of 144.7 last registered in May.

The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is closely watched 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 nine-point drop in consumer confidence over the last two months underscores an anxiety about future economic conditions,'' says Lynn Franco, director of the Conference Board's Consumer Research Center. ``The dip in expectations may reflect concern about the still unresolved presidential election.''

Consumer confidence has fallen sharply since the index recorded 142.5 in September; the last time it was this low was in October 1999, when it stood at 130.5.

The drop also was greater than expected; analysts had predicted the index would fall to 134.8 given consumers' ongoing concerns.

``People can't help but be impacted by their sense of the future,'' said Sherry Cooper, global economic strategist for Harris Bank of Chicago. ``This doesn't surprise me. The Nasdaq has been plunging. There's political turmoil. Energy costs are rising. People are going to be paying higher heating bills.''

Stocks were mixed following the release of the report before heading lower. The Dow Jones industrial average was down 22 points to 10,524 and the Nasdaq composite index down 88 points to 2,792 in late morning trading.

The downtick in consumer confidence, which combines how consumers view their present financial situation with how they see their future situations, comes entirely from consumers' bleaker view of upcoming months. Consumers' outlook for the future registered a sharp drop at 103.4, down from 108.4.

``Consumers are still feeling confident about their personal financial situations. They are concerned about six months down the road and a lot of that reflects the political uncertainty,'' said David Orr, chief economist at First Union Capital Markets Group in Charlotte, N.C.

Orr also pointed to an increase in consumers' confidence in the present, from 178.7 from 176.8 in October, a potentially good sign for the holiday season. ``There is no indication that consumers would stop their holiday spending from this number,'' he added.

The report showed consumers believe jobs will be slightly harder to get and that there won't as many in the next six months. And fewer consumers foresee business conditions or employment improving in the next six months.

But despite that pessimism, more consumers â€” 27.6 percent up from 24.6 percent in October â€” think their incomes will rise in that time period. Only 5.9 percent of them believe their paychecks will shrink.

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On the Net: http://www.conferenceboard.org