Consumer Confidence slips slightly

Tuesday, August 29th 2000, 12:00 am
By: News On 6

NEW YORK – Americans were less confident about the health of the economy in August, but remain optimistic overall about its prospects, a new report said Tuesday.

Related link

Conference Board Web site

The Conference Board said its Consumer Confidence Index now stands at 141.1, down from a revised 143 in July and well below the record level of 144.7 measured in January and May. The index was slightly below the 141.4 most Wall Street analysts were expecting.

The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer spending makes up about two-thirds of the nation's economic activity.

"Recent fluctuations may indicate that confidence levels have reached a plateau, and a cooling in spending habits may well be on the horizon," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Despite the decline in confidence, consumers' attitudes about future economic growth prospects remain upbeat."

The report released Tuesday comes a week after the Federal Reserve passed on an opportunity to raise interest rates as part of a larger effort to cool the economy down. The Fed had previously hiked rates six times since last summer to allay concerns the economy was growing too quickly, and the unsustainable growth would lead to inflation.

The markets were little changed following the release of the report, with the Dow Jones industrial average down 18 points to 11,234 and the Nasdaq composite index up 15 points to 4,086.

The Conference Board, a business-funded group, said its survey found that consumers had mixed feelings about the economic health of the United States.

The percentage of survey participants rating business conditions "good" rose to 46.3 percent from 45.4 percent in July. At the same time, those rating conditions "bad" climbed to 8.3 percent from 7.3 percent.

About 10.6 percent of consumers surveyed in August said jobs were "hard to get, " compared with 9.6 percent a month ago.

The Conference Board said consumers are unsure what to expect from the economy in the short term, with many expressing uncertainty about the job market. Still, many plan big purchases.

Its survey found that 17.4 percent of participants expected an improvement in business conditions during the next six months, up slightly from 17.2 percent last month. The percentage expecting conditions to worsen dropped to 5.5 percent from 6.1 percent.

Respondents were also unsure about future job prospects, with 16.8 percent expecting more jobs to become available, compared with 17.6 percent in July. The percentage expecting fewer jobs rose to 11.2 percent from 10.2 percent.

However, income prospects were more rosy, with 27.9 percent of respondents saying they expect their income to rise, compared with 26.4 percent in July.

About 31.2 percent of consumers said they planned to buy major appliances in the next six months, compared with 27.4 percent in July.

The percentage of consumers planning to buy cars also increased, to 8.5 percent in August from 7.3 percent in July.