WASHINGTON - Confidence among U.S. consumers unexpectedly dropped in January as gasoline prices picked up and more Americans said jobs were hard to get.
The Conference Board’s confidence index fell to 61.1 from a revised 64.8 reading in the prior month, figures from the New York-based private research group showed Tuesday. The median forecast of economists surveyed by Bloomberg News called for a rise to 68. The figure was lower than the most pessimistic projection.
Job growth has fallen short of the pace required to drive bigger gains in wages, at the same time higher fuel costs threaten to strain household budgets and limit spending. The report showed fewer Americans expect their incomes to increase in the next six months, and they pared plans to purchase cars and homes.
Sentiment data indicate “just how fragile households believe the economic expansion is,” Steven Wood, president of Insight Economics LLC in Danville, Calif., said before the report. It is “largely the result of ongoing weakness in the labor and housing markets as well as the political bickering in Washington and on the campaign trail.”
Stocks pared gains after the report and other figures showing business activity cooled this month. The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,313.18 at 10:06 a.m. in New York, after increasing as much as 0.6 percent.
The Institute for Supply Management-Chicago Inc. said Tuesday its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth.
Residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the housing market, a separate report showed.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from November 2010 after decreasing 3.4 percent in the year ended in October, the group said Tuesday in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg survey.
Estimates for consumer confidence ranged from 62.5 to 72.5 in the Bloomberg survey of 74 economists. The measure averaged 53.7 during the recession that ended in June 2009.
The group’s measure of present conditions decreased to 38.4 from 46.5 a month earlier. The gauge of expectations for the next six months dropped to 76.2 from 77.
Jobs Hard to Get
The share of consumers who said jobs are currently plentiful fell to 6.1 percent from 6.6 percent. Those who said jobs are hard to get increased to 43.5 percent, the highest in three months, from 41.6 percent.
The proportion expecting incomes to rise over the next six months dropped to 13.8 percent from 16.3 percent. Still, the percent of respondents expecting more jobs to become available in the next six months increased to 16.2 from 14 the previous month.
Consumers are “less optimistic about business conditions and their income prospects,” Lynn Franco, director of the Conference Board’s Consumer Research Center, said in a statement. “Recent increases in gasoline prices may have consumers feeling a little less confident this month.”
A gallon of regular unleaded gasoline has increased since falling to a 10-month low of $3.20 in December, according to AAA, the nation’s largest automobile association. The price yesterday was $3.44 a gallon, the highest since the end of October.
Employers added 145,000 jobs in January after payrolls rose by 200,000 in December, according to the median estimate in the Bloomberg survey before the Feb. 3 data from the Labor Department.
Consumers are limiting their purchases as they rebuild savings. The economy expanded 2.8 percent in the final three months of 2011, compared with economists’ 3 percent median forecast, according to Commerce Department data released on Jan. 27. Household purchases rose 2 percent.
Today’s report is at odds with other figures. The Bloomberg Consumer Comfort Index steadied at minus 46.4 in the week ended Jan. 22 after minus 47.4 the prior week. The Thomson Reuters/University of Michigan final index of consumer sentiment jumped in January to the highest level in almost a year.
Harley-Davidson Inc., the Milwaukee-based motorcycle maker, reported a fourth quarter profit on stronger demand. Chief Financial Officer John Olin cited a “challenging but slightly improving economic environment” in discussing the results.
“Sales in the U.S. during the quarter were supported by strong product offerings, improved consumer confidence, and improved product availability,” he said in a teleconference with analysts and investors on Jan. 24.
Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.