WASHINGTON - Consumer confidence tumbled in May to the lowest level in six months on continued worries over jobs and general business conditions, the Conference Board reported yesterday.
The consumer confidence index of the New York-based business research organization posted a reading of 61.5, down from 67.6 in April. The retreat, which helped lift the bond market, marked the lowest point in public spirits since an October reading of 54.6. The index is based on a 1985 base average of 100.
"Consumer confidence continues at levels that are historically associated with a weak economy." said Fabian Linden, executive director of the Conference Board's consumer research center, in a statement.
Analysts said the report seems to reflect renewed upcertainty and disappointment among consumers after President Clinton's election raised hopes that he would move quickly to revive the economy. Instead, the economy appears to be plodding along in slow gear, and the administration has had to struggle to advance its economic program in Congress.
"Consumers are being bombarded with news stories about higher taxes to pay for health care or deficit reduction," said L. Douglas Lee, chief economist for County Nat West USA. "It's happening at a time when the employment picture is not very strong and income growth is not very rapid. It's hard for consumers to feel good in that kind of atmosphere."
The Commerce Department's initial estimate showed the economy growing only 1.8% in the first three months, and a revised report due out Friday is expected to indicate an even weaker pace.
Growth during the period from April to June may not be robust, either, some economists are saying. Lee estimated gross domestic product will be between 1% and 1 1/2%, "so that gives us a pretty slow first half of the year."
The Conference Board's index is based on two components, one measuring how those surveyed feel about current conditions and another based on the outlook for the next six months. The index for future expectations took the biggest drop, skidding to 72.2 from 81.1 in April.
With an unemployment rate stuck at 7%, "consumers are increasingly worried about job prospects." said Linden. Only 13% of those surveyed believe there will be more jobs in the months ahead, the lowest reading in more than a year, he added.
The survey found that the number of households fearing their family income will decline in the months ahead reached the highest level in more than a year. But buying plans were mixed, as household plans to buy a car were up slightly and home purchasing plans were up after three months of decline.
The findings suggest that consumer buying will remain tentative for the next few months, said James Solloway, director of research for Argus Research Corp.
"The downturn in confidence reflects the disappointment with what's happening in Washington, " said Solloway. "People are looking for some help in getting the economy started, but what we're seeing is a continuation of gridlock, and whatever does pass will most likely include higher taxes.
"So as far as the average person is concerned." he continued, "it's the worst of both worlds. Programs that ought to make a difference don't see the light of day, and the only thing that does is higher taxes and increased costs affecting businesses that will further impede progress on the jobs front."
A separate report on existing home sales issued yesterday by the National Association of Realtors seems to signal that any rebound in the housing market will be mild. Sales rose 2.7% to a seasonally adjusted annual rate of 3.46 million units in April, wiping out a revised 2.6% drop in March.
Analysts were expecting sales to recover after the bad weather in March. The realtors' group said it expects low interest rates to help spur a 3.9% gain in sales for all of 1993.
