Consumer Confidence Falls
Donít look now, but that Bush economic recovery is not meeting the hype. And this is before the Christmas sales results are fully in.
Stocks slipped in sluggish trading on Tuesday after unexpectedly weak reports on consumer confidence, home sales and manufacturing in the Midwest dampened investors' appetite for shares.
The dollar's slump to lifetime lows against the euro amid an eroding economic outlook and worries about possible attacks on U.S. targets helped add to the cautious tone developing on Wall Street.
U.S. consumer confidence deteriorated in December as Americans remained anxious about their job prospects, the Conference Board said. The private research firm said its index of confidence eased to 91.3 in December from an upwardly revised 92.5 in November. The December reading fell below the forecast for 91.5.
A separate report showed that business activity in the U.S. Midwest expanded in December for the eighth straight month, but at a pace that fell short of expectations. The National Association of Purchasing Management-Chicago's business barometer fell to 59.2 in December from November's 64.1, which was a nine-year high.
The results today fell short of economistsí expectations, and led some to question the true strength and pace of the economic recovery.
Analysts said there was no cause for alarm but warned that the US economy might be slightly less dynamic than had been thought.
The Conference Board index of consumer confidence fell back 1.2 points to 91.3 in December, echoing a similar decline in the University of Michigan index.
The fall in the confidence measure was modest but the research added to worries that the long-awaited recovery in the US labour market has yet to gain a secure footing.
The proportion of respondents saying that jobs were plentiful fell, with this component of the index sliding 3 points to 12.5. A rising proportion of those asked said jobs were hard to get.
The survey might deflate expectations that companies are starting to rebuild inventories - a process that many economists have been relying on to support economic growth in the final three months of the year. The inventory component of the index fell back from 43.4 to 40.6.
"Manufacturing activity is rebounding but remains in a transitional phase," said Aaron Smith, an analyst at Economy.com, a consultancy. "Manufacturers continue to question the sustainability of current demand, evidenced by the ongoing paring of inventories and lack of industry hiring."
Uh huh. But remember, all is well and the recovery is off to a strong start due to Wís economic program of borrow and spend.