Slow Recovery Puts a Damper on Confidence

Consumer confidence, an important indicator of the economy’s prospects, fell slightly this month as Americans faced up to an extremely sluggish recovery from recession, a business research group said Tuesday.

The Conference Board survey reflected a continuing erosion of confidence since the euphoric reaction that followed the victory of U.S.-led allied forces over Iraq in February.

The board’s consumer confidence index fell to 76.3 in August from 77.7 in July and is at its lowest level since a reading of 59.4 in February, when the Gulf War was in full swing. The index compares to an average reading of 100 in the 1985 base year.

The monthly index is considered an important leading indicator of the economy because U.S. consumers buy two-thirds of all goods and services produced in this country.

The Federal Reserve has been steadily lowering interest rates, in part to spark consumer spending, but indicators so far have shown only a sputtering recovery from the recession that began in July, 1990.

“The prime concern we keep picking up is jobs,” said Fabian Linden, executive director of the board’s Consumer Research Center.

In the latest survey, 8.8% said jobs are plentiful, and 38.6% said they are hard to get. By comparison, a year ago 21.4% said they were plentiful and only 25.8% said they were hard to get.

Last month the unemployment rate was 6.8%, compared to 5.5% a year earlier.

Figures in the index are based on a nationwide survey of 5,000 households taken before last week’s attempted coup in the Soviet Union and the subsequent turmoil that is rapidly leading to the breakup of the country.

Confidence Dips The consumer confidence index is taken from a monthly survey of 5,000 U.S. households. 1085 equals 100 August, ‘91: 76.3 Source: The Conference Board