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US Consumer Confidence Continues to Decline - 2002-12-31

Concern about rising unemployment undermined consumer confidence across the United States in December.

The Conference Board, a private business research group, reports that its monthly Consumer Confidence Index declined four points in December.

The index has declined for six of the past seven months. But business analysts had expected consumer confidence to edge up following a rebound in November.

The survey is based on samplings from 5,000 U.S. households. Lynn Franco, director of the Conference Board's Consumer Research Center, said worries about current unemployment rates and the future job market spurred the decline.

"We ask one question about their assessment of current labor market conditions and we also ask them their expectations," Lynn Franco said. "But the current is having a much more negative impact on the overall confidence level than the expectations. They are telling us that the labor market conditions have not improved in the last month. They have gotten a little worse," Ms. Franco continued. "With that kind of job apprehension, that tends to impact spending as well. So from these figures, what we are seeing is that there is not going to be a dramatic pickup in spending any time soon either."

Ms. Franco said preliminary figures show that softening consumer confidence took a toll on retail profits during the key holiday spending season.

"Retailers had anticipated a weak season so they began discount campaigns earlier and what we are seeing is that while consumers were out there in numbers and making the purchases, due to the heavy discounting it is really squeezing retailers' profit margins," Ms. Franco added. "So while they may have been buying in bulk, the pricing was kept low to entice consumers to come into the store and it is not yielding a very favorable profit picture."

The percentage of consumers who expect employment to continue to decline rose in December. But consumers expressed a bit more optimism about business conditions in general, saying they expect an improvement over the next six months.