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By JEANNINE AVERSA, Associated Press Writer
WASHINGTON - 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 this week, 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 last Friday showing the nation's payrolls in March
posted their biggest gains in four 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 tad 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 (news - web sites) and
rising energy prices may be making consumers feel less optimistic about
economic prospects, economists said.
"The situation in Iraq is probably the biggest threat to consumer
confidence," said Lynn Reaser, chief economist at Banc of America
Capital Management.
The economy and Iraq also are major issues in the presidential campaign.
Presumptive Democratic presidential nominee John Kerry (news - web sites)
has raised questions about President Bush (news - web sites)'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 United States 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.
"Despite the softness in consumer attitudes in April, consumer
spending should continue at a vibrant pace," predicted Richard
Yamarone, economist at Argus Research Corp.
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.
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