According to a research from a New York based private group, Confidence among U.S. consumers is the least in August, when compared to past 10 months. The research index decreased to 60.6, from a revised 65.4 in July, highlighting that households are not very optimistic about improvement in their employment prospects, or of the economy as a whole. The same was confirmed from another survey of 77 economists by Bloomberg, where the measures ranged between 62 to 68. The same measure averaged 53.7 during the 18-month recession that ended in June 2009.
The confidence report, which covered all income and age groups, found the rising gasoline prices could fuel the inflation expectations. About the spending pattern, the report revealed that more Americans are interested in buying a home, as compared to an automobile. Regarding employment, 15.4 percent respondents were of the belief that they expected more jobs to become available in the next six months, compared to 17.6 percent the previous month, also a percentage of respondents who expect fewer employment opportunities, rose to 23.4 percent, the highest since November. The proportion who said they expected their incomes to decrease over the next six months rose to a 10-month high of 16.8 percent, from 14.9 percent in July. Some 52.3 percent of consumers said jobs are currently not plentiful.
The percent of American consumers, who expected better business conditions in the next six months declined to 16.5 percent in August, from 19 percent. Some 17.7 percent say conditions will be worse, the most since October of last year.
|% of respondents who:|
|expect more jobs to become available in the next six months|
|expect fewer employment opportunities|
23.4 % ( Highest since November)
|expected their incomes to decrease over the next six months|
16.8% (10 month Highest)
|expected jobs are currently not plentiful|
|expected better business conditions in the next six months|
The reasons cited for the pessimistic expectations of the consumers were: rising gasoline prices, persistent unemployment rate of over 8 percent, and almost nil savings. Such negative sentiments could adversely affect the world’s biggest economy, as household purchases account for about 70 percent of the total spending.
“The consumer is still very cautious,” said Jim O’Sullivan, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, “The labor market is still relatively weak. There’s a lot of uncertainty about policy ahead of the election” and fuel costs have accelerated, he said.
Another report claimed a 0.5 percent increase in property values in 20 U.S. cities from a year earlier. The S&P/Case-Shiller index rose for the 12 months ending in June, the first year-over-year gain in almost two years.
“We are very encouraged by our results,” Robert Toll, chairman of Toll Brothers Inc. (NYSE:TOL), said during an Aug. 22 call, after the Horsham, Pennsylvania-based luxury-home builder’s third-quarter earnings were better than expected. “We do remain cautious in our optimism, as we believe consumer confidence remains fragile and subject to the impact of negative economic and political headlines.”
According to the data from Commerce Department, Consumer purchases increased by a 1.5 percent in the second quarter, against 2.4 percent in the last quarter. It has been a mixed sentiment, some indicators showing positive sentiments, while others portray the negative. As per the Labor Department figures released Aug. 3, payrolls increased by 163,000 in July, the most in five months, while the unemployment rate climbed to a five-month high of 8.3 percent in July. On one hand where S&P 500 has gained for the third straight month, average gasoline prices have risen by 23.5 cents this month to $3.76.