[NYTr] US Consumer Confidence Tumbles in November

Tue Nov 27 16:34:14 EST 2007

[... and what took them so long? -NY Transfer]

AP via Yahoo - Nov 27, 2007
http://news.yahoo.com/s/ap/20071127/ap_on_bi_ge/economy

Consumer confidence tumbles in November

By ANNE D'INNOCENZIO
AP Business Writer

With Christmas only a month away, American consumers became more
pessimistic about the economy in November, sending a widely watched
barometer of confidence to the lowest level in two years amid worries
about rising fuel costs and a housing market slump.

The New York-based Conference Board said Tuesday that its Consumer
Confidence Index dropped to 87.3, marking a four-month slide and
continuing down almost 8 points from the revised 95.2 in October.

It was the lowest reading since 85.2 in October 2005 when gas and oil
prices soared after hurricanes flooded New Orleans and shut down a
large chunk of the nation's oil refineries. It also marked the sharpest
drop since September 2005 when the index plummeted 18 points from the
previous month. Analysts had expected a reading of 91.5 in November.

"Consumers' apprehension about the short-term outlook is being fueled
by volatility in financial markets, rising prices at the pump and the
likelihood of larger home heating bills this winter," said Lynn Franco,
director of The Conference Board Consumer Research Center, in a
statement.

The Present Situation Index, which measures how shoppers feel now about
the economy, fell to 115.4 from 118.0 in October. The Expectations
Index, which measures shoppers' outlook over the next six months,
declined to 68.7 from 80.0.

"It doesn't mean that shoppers are not going to spend. It implies they
are going to be cautious," this holiday season, said Joel L. Naroff,
president and chief economist at Naroff Economic Advisors Inc. "To me,
it will be a mediocre season, not a terrible one, but not a good one
either."

Wall Street paid little attention to the consumer confidence report,
rebounding modestly Tuesday after the Abu Dhabi Investment Authority
said it will invest $7.5 billion in Citigroup Inc. — a vote of
confidence for the nation's largest bank, which has struggled with
heavy losses amid the ongoing mortgage crisis.

The Dow Jones Industrials rose 182.16, or 1.43 percent, to 12,925.60 in
Tuesday afternoon trading.

For retailers, the downbeat report on consumer confidence further
fueled concern that the holiday shopping season will be weak. Retailers
struggled with disappointing sales this past fall, and while many
retailers were encouraged by better-than-expected turnout for the
official start of the holiday shopping season, it was the fat discounts
that lured consumers in.

According to the International Council of Shopping Centers-UBS index,
same-store sales rose 2.5 percent for the week ended Saturday, compared
to the year-ago period. Same-store sales are sales at stores opened at
least a year and are considered a key indicator of a retailer's health.
According to Michael P. Niemira, chief economist at ICSC, "customer
traffic was reasonably healthy but consumers were out looking for
bargains."

The nation's retailer will provide a more complete picture of how the
Thanksgiving weekend fared when they report same-store sales for
November on Dec. 6.

The big worry is that shoppers will take their time returning to the
stores this holiday season amid worries that higher gas, an escalating
credit crisis and a slumping housing market could push the economy into
a recession.

With consumer spending accounting for two-thirds of U.S. economic
activity, any further dropoff of consumer spending increases the risks
of a recession.

A report, released Tuesday, on home prices offered another sign that
the housing slump is far from over. According to S&P/Case-Shiller
index, U.S. home prices fell 4.5 percent in the third quarter from a
year earlier, the sharpest drop since Standard & Poor's began its
nationwide housing index in 1987. The index also showed that prices
declined 1.7 percent from the previous three-month period, the largest
quarter-to-quarter decrease in the index's history.

One bright spot has been the labor market, which has held steady.
Earlier this month, the Labor Department reported that the nation's
payrolls grew by a net 166,000 in October, the most in five months. The
unemployment rate remained at 4.7 percent.

The consumer confidence report — derived from 5,000 responses through
Nov. 19 — showed that shoppers' outlook for the labor market was more
pessimistic, however. The percent of consumers expecting more jobs in
the months ahead fell to 10.8 percent from 13.3 percent, while those
anticipating fewer jobs rose to 23.1 percent from 20.2 percent. The
proportion of consumers expecting their incomes to decrease in the
months ahead rose to 11.0 percent from 9.1 percent.