Consumer Confidence Lowest Since '96greenspun.com : LUSENET : Unk's Wild Wild West : One Thread |
http://news.excite.com/news/ap/010227/17/economyConsumer Confidence Lowest Since '96
Updated 5:01 PM ET February 27, 2001
By ADAM GELLER, AP Business Writer
NEW YORK (AP) - Mounting worries about jobs and the business climate dragged consumer confidence in February to its lowest level in more than four years, and that pessimism was reinforced by bleak reports on factory orders and home buying Tuesday.
The Conference Board said 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.
"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 Joel Naroff of Naroff Economic Advisors in Holland, Pa.
Orders to U.S. factories for big-ticket manufactured goods plunged in January to their lowest level in 19 months, the Commerce Department said. Meanwhile, new-homes sales plummeted by 10.9 percent in January, the biggest drop in seven years.
For now, the economy continues to walk a tightrope, avoiding a plunge into recession, said Lynn Franco, director of the Conference Board's Consumer Research Center.
"The erosion in consumer confidence continues to be fueled by weakening expectations regarding business and employment conditions," Franco said. "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."
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 overall February confidence figure was lower than the reading of 110.5 that had been expected by analysts.
Still, one economist noted that some figures contained within the Conference Board's report indicate less dire concerns on the part of many consumers.
"Generally, it's a weak number on the headline, but the details show a little more encouragement," said Gary Thayer, chief economist for A.G. Edwards & Sons in St. Louis.
Thayer pointed to figures in the Conference Board's report showing a growing number of people believe the current economy is exhibiting normal conditions, as well as figures indicating more consumers plan to buy new homes and cars in the next six months.
The new report comes amid intense speculation about whether the Federal Reserve policy-makers will cut interest rates again before their next meeting, March 20. But Thayer and Naroff said they don't believe the drop in confidence will be enough to push the Fed into taking early action.
The markets moved lower on the reports as well as continued pessimism over the economy. The Nasdaq composite index dropped 100 points to 2,207 - a new 2-year low - while the Dow Jones industrial average was off 5 points to 10,636.
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.
But 57.9 percent of consumers now believe the current economy is exhibiting normal conditions, up from 54.8 percent last month. The numbers of people with plans to buy new homes and cars in the next six months also increased, the Conference Board reported.
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On the Net: http://www.conferenceboard.org
-- (M@rket.trends), February 28, 2001
http://biz.yahoo.com/apf/010228/economy_7.htmlBy MARCY GORDON
AP Business Writer
WASHINGTON (AP) -- The economy marked its weakest performance in more than five years in the final three months of 2000, growing at an annual rate of only 1.1 percent.
The anemic performance of the Gross Domestic Product -- the total output of goods and services produced within the United States -- came as the economy was battered by declining exports and spending on durable goods in the fourth quarter.
The Commerce Department report showed how dramatically the economy had slowed since the second quarter of last year, when it grew at a hectic pace of 5.6 percent.
The fourth-quarter annual growth rate of 1.1 percent was the smallest since 0.8 percent in the second quarter of 1995. It was revised downward from an already-weak 1.4 percent estimated a month ago.
On Tuesday, worries about jobs and the business climate showed consumer confidence in February being dragged to its lowest level in more than four years. The pessimism was reinforced by two other Commerce Department reports: Orders to U.S. factories for big-ticket items plunged in January to their lowest level in 19 months, while new home sales plummeted 10.9 percent, the biggest drop in seven years.
Wednesday's new government report came shortly before Federal Reserve Chairman Alan Greenspan delivered a sober assessment of the economy to Congress, saying the sharp slowdown that began in the second half of last year ``has yet to run its full course.''
President Bush, meanwhile, sent Congress a budget proposal that would use ballooning surpluses to give Americans a $1.6 trillion tax cut over 10 years, which Bush has promoted as being needed to rev up the slumping economy.
An inflation gauge tied to the Gross Domestic Product rose at an annual rate of 1.9 percent in the fourth quarter, up from 1.8 percent in the third quarter. For all of 2000, this gauge -- which measures the price increases on consumer goods -- was up 2.4 percent, the highest since 1993.
Spending on big-ticket durable goods such as automobiles and other costly manufactured goods expected to last at least three years fell at an annual rate of 2.8 percent in the fourth quarter, compared with a strong 7.6 percent rate of growth in the third quarter.
U.S. exports declined 6.1 percent, compared with a 13.9 percent increase in the third quarter.
The economic slowdown has brought thousands of job layoffs across a number of industries. Economists have begun to fear that the nation's decade-long economic expansion, the most prolonged in history, may be in danger of ending.
On Wall Street, investors have been hoping that the Federal Reserve might be preparing another cut in interest rates, like the surprise half-percentage-point cut on Jan. 3.
Their disappointment sent stocks tumbling Wednesday as Greenspan said the central bank prefers to adjust rates at scheduled meetings, and news of the poor economic performance in the fourth quarter added to the market's funk.
In midday trading, the Dow Jones industrial average dropped 117.23 points to 10,519.65. At 4 p.m. EST, the average was down 141.60 at 10,495.28 after falling as much as 213 points in volatile trading.
Even with the slowdown in the latter part of last year, however, the economy grew by 5.0 percent in 2000, the best showing since a 7.3 percent rise in 1984. That capped a remarkable four-year period in which growth every year was above 4 percent, the best performance since the mid-1960s.
In the fourth quarter, business investment on new plants and equipment -- a major force behind the economic expansion -- slipped 0.6 percent, compared with a surge of 7.7 percent in the third quarter.
All the changes show the economy growing at an annual rate of $24.7 billion in the last three months of 2000, pushing the nation's total output of goods and services to around $9.4 trillion, after adjusting for inflation.
-- (GDP@growth.slowing), March 01, 2001.