What recovery? Americans still gloomy on economy
CHICAGO — The housing market and stocks may be looking up, but Americans just can’t shake their job worries.
In a sign that talk of an economic recovery has yet to soothe a recession-battered nation, consumer confidence fell in October and came in well below what analysts were expecting.
For stores, the reading is reason to worry that holiday sales might be even worse than they feared.
In a separate reading, the Conference Board reported shoppers’ sentiments about the state of the economy are the gloomiest in nearly three decades. Americans reported they plan to cut back on spending, in large part because they don’t trust the job market.
The unemployment rate is just under 10 percent, and economists say it could hit 10.5 percent next year.
“It’s hard to get a job, and the ones that are out there don’t pay enough,” said Mitch Hicks, a 33-year-old from Hillsboro, Ore., who lost his job at a cabinet company a year ago and is still struggling to find work.
The board’s index of consumer confidence fell to 47.7 in October from 53.4 in September. Economists were expecting only a small decline, to 53.1. It takes a reading of 90 to indicate an economy on solid footing, 100 or more to indicate growth.
Nearly half the 5,000 households surveyed by the board said jobs were hard to come by, and about one in four said they expected fewer available jobs in the coming months.
“We’ve gone down so far that it’s kind of like when you fall into a deep hole and you’re down 20 feet and you climb up by three feet,” said Brian Bethune, an economist at IHS Global Insight. “You’re better off than you were before, but you’ve still got a long way to go to get out.”
There have been signs of recovery elsewhere: Corporate earnings are getting stronger, the stock market has regained much of its lost ground and figures due out Thursday are expected to show the recession officially ended in June or July.
And there was another indication Tuesday that the housing market is stabilizing. The Standard & Poor’s/Case-Shiller price index showed home prices in August climbed for the third consecutive month, helped by a popular tax credit for first-time homebuyers.
But all the improvements haven’t translated to economic security.
Sharon Jerndt, 47, is trimming her holiday gift list because she’s scared of racking up credit card debt. She’s also eating at home and skipping other indulgences.
“I’m trying to only pay with cash,” said Jerndt, who works as a court reporter in Chicago.
Economists pay close attention to consumer confidence because it’s a good barometer of the attitude of shoppers, whose spending on goods and services ultimately fuels 70 percent of the U.S. economy.
At best, economists expect holiday sales to be flat from a year ago, when businesses recorded their biggest declines in at least four decades.
Americans are “quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.
The confidence index sank to a historic low of 25.3 in February. It’s still well below the reading of 61.4 last fall just before Lehman Brothers collapsed, the beginning of the financial crisis.
AP Retail Writers Sarah Skidmore in Portland, Ore., and Betsy Vereckey in Chicago contributed to this report.Filed under News, SAP | Tags: Chicago, Illinois, Labor Economy, North America, Recessions And Depressions, United States, US Economy | Comment Below