Consumer Confidence Falls for 3rd Month on Job Fears

Worries about job prospects sent consumer confidence to a seven-month low this month, its third consecutive monthly decline. The steeper-than-expected drop raised questions about whether consumers would be in the mood to spend during the crucial holiday shopping season.

The consumer confidence index dropped 3.9 points to 92.8, down from a revised 96.7 in September, according to a report Tuesday from the Conference Board, a private research group. Analysts had expected a reading of 94.

The October figure is the lowest since March, when the reading was 88.5.

The index had been rising since April, before falling 3 points to 98.7 in August and an additional 2 points in September.

“Subdued expectations, as opposed to eroding present-day conditions, were the major cause behind October’s decline in consumer confidence,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “And, while consumers’ assessment of the labor market this month showed a moderate improvement, the gain was not sufficient to ease concerns about job growth in the months ahead.”

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

This month, the nation’s largest retailers reported their fourth straight month of tepid sales in September. High gasoline prices and grocery bills and ongoing job insecurity prompted many consumers to again limit their spending.

Still, economists believe merchants are in a better position than a year ago, when consumer confidence measured 81.7 in October 2003.