NEW YORK (AP) — If you're a U.S. consumer, why would you be confident?
Following a string of bad economic news, consumer confidence fell to a seven-month low in June on continuing worries about high unemployment and stagnating wages, according to a report released Tuesday by a private research group. The Conference Board's Consumer Confidence Index slipped to 58.5 in June. That's down from a revised 61.7 in May, which marked an almost six-point drop.
"Given the combination of uneasiness about the economic outlook and future earnings, consumers are likely to continue weighing their spending decisions quite carefully," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.
A reading of 90 indicates a healthy economy on the index, which measures how Americans feel about business conditions, the job market and the next six months. Economists carefully monitor consumer confidence because consumer spending accounts for 70 percent of economic activity.
Two years after the recession officially ended in June 2009, consumer confidence is still fragile. The index has lost momentum since it hovered between the high 50s and low 60s last year, and then climbed to a three-year high in February, reaching 72. June's results marked the lowest point since December 2010 when the index hit 57.8. In June 2009, the reading was 49.3.
Economists had expected the June figure to edge up to 61 as consumers faced lower prices at the pump and inflationary fears dissipated.
Consumers had been hurt by rising gas prices that neared $4 per gallon in late April and early May, leading many to cut back on spending for everything from televisions to clothes. But since the Memorial Day weekend, gas prices have fallen to a national average of $3.57 per gallon. And oil prices have declined steeply over the last few weeks, which should eventually translate into even lower pump prices.
But the fact that consumers are experiencing less pain at the pump has been overshadowed by other economic news that ranges from mildly encouraging to downright bad.
The consumer confidence report was issued on the same day a widely watched Standard & Poors/Case-Shiller index reported that spring buying boosted home prices in 13 U.S. cities. But the report also showed that housing remains weak in most of the country. Economists say homeowners are mostly unwilling to sell their homes given the widespread declines in home values. And nearly 2 million foreclosures have hit the market over the past two years.
The government on Monday reported that consumer spending was unchanged in May compared with April, marking the first time in a year that spending hasn't increased from the previous month. The same report found that incomes rose 0.3 percent for the second straight month. But adjusted for inflation, after-tax incomes increased only 0.1 percent in May, after falling by the same amount in the previous month.
Moreover, prices in the food aisle remain high and this fall, shoppers will be seeing the cost of clothing and accessories rise as retailers grapple with higher labor costs in China and soaring prices of raw materials like cotton. Stores had started to raise prices this spring but only on select items.
Americans are most worried about the dismal job market. Hiring has slowed this spring after a strong start at the beginning of the year. The economy produced only 54,000 jobs in May, the lowest number in eight months. That followed three months in which employers hired an average of 220,000 net new workers each month. The unemployment rate inched up to 9.1 percent last month from 9.0 percent in April.
"Even though lower gas prices have provided some relief, people are still worried about their jobs," said Mark Vitner, senior economist at Wells Fargo. "A lot of the economic data has been weak, and it has a lot of folks wondering about their job prospects."
The Conference Board survey, conducted by The Nielsen Co., is based on a random survey mailed to approximately 3,000 households from June 1 through June 16. Survey, whose numbers are updated after the month ends, showed worries about the job market and income flared up.