Consumer confidence sank during the past month, weighed down by worries about job security and concerns about local economic conditions in the months ahead.
The AP-Ipsos consumer confidence index dropped to 84.8 the week of April 4, from a reading of 97.7 in early March, when Americans' feelings about the economy had shown an improvement from the previous month.
The decline in consumer confidence comes as other recent economic indicators suggest the overall national economy is gaining ground and that the jobs market may be finally turning an important corner.
The April consumer confidence reading was taken after the government released a report in early April showing the nation's payrolls in March posted their biggest gains in 4 years. Yet some economists believe that the preceding months of fairly lackluster job growth and a political and media spotlight on the issue of U.S. jobs migrating overseas may have heightened consumers' anxiety about their own job security.
"We've been saturated with the evils of offshoring jobs and that does start to color our perceptions," said Carl Tannenbaum, chief economist at LaSalle Bank. "I would have expected the level of comfort about jobs, though, would have been enhanced by the March employment report. But one month doesn't make a trend and there may still be lingering anxiety."
April's confidence index reading, the lowest since early October, was a little higher than the 83.3 registered for the same month a year ago when the economy was suffering from monthly job losses and was still struggling to get on firm footing.
The AP-Ipsos confidence index is benchmarked to a 100 reading on January 2002, the month the index was started by Ipsos.
Concerns about the surge in violence in Iraq and rising energy prices may be making consumers feel less optimistic about economic prospects, economists said.
The economy and Iraq also are major issues in the presidential campaign. Presumptive Democratic presidential nominee John Kerry has raised questions about U.S. President Bush's handling and leadership in these areas. Bush, meanwhile, has defended his policies.
A measure of consumers' feelings about the jobs climate showed the sharpest over-the-month decline of four subindexes. That "jobs" gauge dropped to 100.3 in early April, compared with 109.3 in March. The new reading was the lowest since early October.
Even with the robust payroll gain of 308,000 in March, the economy still has lost a net 1.84 million jobs since January 2001, the month Bush took office.
A subindex measuring consumers' feelings about economic expectations, including conditions in the local areas where they live or work, over the next six months, fell to 90.5 in early April, from a reading of 95.2 in March.
A measure of consumers' feelings about current economic conditions was 94.3 in early April, down from March's reading of 96.8.
The decline in both the expectations and current conditions subindexes may have been affected by concerns about the Iraq situation and higher energy prices, which don't seem to be letting up, economists said.
Another gauge looking at consumers' attitudes about making a purchase, saving and other investment decisions, declined to 95.7 in early April, from 97.7 in March. That dip, too, may have been affected by higher energy bills, making some people feel they have to less to spend or save on other things, analysts said.
So far, however, consumers have kept their pocketbooks and wallets sufficiently open to help the economy. Consumer spending accounts for roughly two-thirds of all economic activity in the U.S. and thus is an important force shaping the recovery.
With tax refunds arriving in mailboxes and borrowing costs at extra-low levels, consumer spending in the first half of this year should be respectable, analysts said. They believe economic growth in the first six months of this year will average more than 4.5 percent, a healthy pace.
April's index reading was based on interviews with 1,000 adults about the economy. Results of those interviews had a margin of error of plus or minus 3 percentage points. (AP)
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