Confidence in Economy Drops Again : Recovery: Pessimism is fueled by political uncertainty and reports of layoffs and corporate reorganizations.

Consumers’ confidence in the U.S. economy flagged again in July, declining for the third straight month to levels not seen since before the presidential election, the Conference Board said Tuesday.

Economists said political uncertainty and news of continuing layoffs and corporate restructurings contributed to the increased pessimism.

“It shows that consumers are still very concerned about the impact of a slow-growth, limited-hiring recovery,” said Stephen S. Roach, a senior economist at Morgan Stanley & Co. in New York.

“There’s just a general reluctance to move up their spending in this environment,” he said.

The Conference Board’s consumer confidence index, compiled from questionnaires sent to 5,000 households and covering topics ranging from spending plans to local job conditions, fell to 57.7 in July.

That compares to a revised 58.6 in June, 61.9 in May and 67.6 in April, the business research group said. It was the lowest reading since 54.6, taken last October, before the election. The index’s base, set in 1985, is 100.

Consumer confidence is closely watched by economists and financial market players as a barometer of consumers’ willingness to borrow and spend.

Falling consumer confidence bodes poorly for the economy, as more than two-thirds of the nation’s economic activity is derived from consumer spending.

“Clearly, the latest message from the consumer strongly suggests that the economy still fails to show any convincing signs of a vigorous recovery,” Fabian Linden, head of the Conference Board’s Consumer Research center, said in a news release.

“With unemployment stuck at around 7%, jobs remain the public’s greatest concern,” he said.

Separately, the Labor Department reported that Americans’ wages, salaries and benefits rose a modest 3.6% in the year ended June 30, a pace unchanged from a year earlier and the latest evidence that inflation was being kept in check.

Consumer Confidence

From a monthly survey of 5,000 U.S. households; index: 1985 = 100 Jan., 1992: 72.6 Jan., 1993: 57.7

Source: The Conference Board