The latest monthly U.S. consumer confidence survey indicates that despite modest gains in new jobs, Americans are pessimistic about the strength of the nation's economy and their employment prospects as the Christmas holiday season approaches.
Bolstered by low interest rates and rising corporate profits earlier this year, consumers thought the job market would steadily improve. But the latest survey from the Conference Board, a private business research group in New York that polled 5000 U.S. households, shows that consumers view the employment outlook as fairly bleak.
Ken Goldstein, an economist at the Conference Board, says mounting crude oil prices, sharp slowdowns in worldwide exports and new hiring, have sapped consumer confidence.
"One of the things that has happened is a turn-back to the kind of caution that we saw early in the first half of 2003," said Mr. Goldstein.
Only a few-months ago, the U.S. and the global economies seemed to be gaining momentum. Hiring was picking up, corporate investing was on the rise, and companies began replenishing their inventories.
Mr. Goldstein says the latest negative economic picture and sluggish job outlook have eroded consumer optimism, which will impact America's critical holiday-buying season.
"What is shaping up here is a holiday season that is very likely to not be nearly as good as last year, which was hardly the best year on record," he added. "All of that follows in the footsteps of four straight declines in our leading economic index. So whether we fell into a soft patch and started to come out of it, or we are still in one, certainly the indication here, both from the consumer sentiment survey, from the leading economic index numbers, for the U.S. and as well as Europe and Asia, there is a downshift in the economy."
The percentage of consumers expecting overall conditions to worsen increased to 10.3 percent from 9.4 percent. Those anticipating fewer jobs to be available in the coming months rose to 18.4 percent from 16.2 percent.
Some analysts note the decline in expectations has not dampened consumer spending, that retail sales and new home sales are up and that more people said they were planning to buy a new car than at the same time last year. Some observers also comment that uncertainty about next week's presidential election may be having an effect on consumer attitudes.