Consumer Blues Depress Markets

NEW YORK - Consumer confidence - or rather, the lack thereof - has become a major preoccupation of the U.S. financial markets.

When confidence indexes for November were released last Tuesday, they proved weak. Treasury securities rose. The dollar fell with respect to other major currencies, and the stock market also softened.

White House spokesman Marlin Fitzwater said confidence was a "very serious" problem, and he renewed the Bush administration's call for fiscal stimulus.

|Dramatic Deterioration'

Ward McCarthy, managing partner at Stone & McCarthy Research Associates Inc., termed the confidence readings by the Conference Board and the University of Michigan "dismal" and "horrible."

"It is not just that these numbers are showing a deterioration," the economist said. "They are showing an abrupt and dramatic deterioration."

The reports have deviated at times in the past. Economists say the Michigan survey is more sensitive to changes in interest rates, and the Conference Board survey more to jobs.

Not a Merry Christmas

Job worries are seen as a major reason for drops in consumer confidence, which are also expected to depress spending during the Christmas retail season.

Bond market sources said the Michigan survey, which goes to paying subscribers, showed consumer sentiment falling to 69.0 in November, from 78.3 in October, and consumer expectations falling to 61.9 from 70.5.

The Conference Board index dropped sharply in November for the second consecutive month, to 50.6 from 60.1.

The November reading was the lowest since May 1980, when it was 50.1. November's score was also three points below the lowest reading registered in the 1982 recession.

"We are in a Catch-22 situation. People are afraid to spend because they are worried about their jobs. What is best for individuals is worst for the population at large," said Mr. McCarthy.

Jason Bram, an economist at the Conference Board, said that of 5,000 people surveyed, only 4.8% said jobs were plentiful. "You cannot go much lower," said Mr. Bram. By contrast, 47.9% said they were hard to get.

Wider Threat Seen

The U.S. unemployment rate, at 6.8% in October, was still below the peaks of previous recessions, such as the 10.8% in 1982.

The mood in the jobs market may be based more on worries that many industries that appeared more or less immune to recessions in the past are now experiencing trouble. IBM Corp., for example, cut 20,000 jobs earlier this year and said last week it would cut an additional 20,000.

"Everyone is fair game," said Mr. Bram.

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