Consumer confidence takes a big drop in early January
WASHINGTON – Consumer confidence took a big hit in early January, dragged down by Americans’ worries about the future.The RBC CASH Index, based on polling by Ipsos, showed that consumer confidence fell to 78.2 this month, the lowest level in three months and 8.5 percent below the December reading.Consumers’ attitudes had taken a sharp hit in September and October when confidence was jolted by the devastating Gulf Coast hurricanes and a resulting spike in energy costs that sent gasoline prices briefly above $3 per gallon.However, confidence had posted sizable gains in November and December as gasoline prices retreated and the job market staged a solid rebound. The December confidence level of 85.5 was the second-highest reading for 2005.The big deterioration this month was unexpected, given that other readings on consumer confidence have been showing strength. Private economists said the new number could be signaling the slowdown they expect in overall economic activity in the latter part of 2006.”I think the confidence number is picking up some concerns about the second half of the year,” said Vince Boberski, chief economist for brokerage company RBC Dain Rauscher.The January decline reflected a steep drop of 37.1 percent in consumers’ expectations about the future and a sizable 9 percent fall in attitudes about labor market conditions.The Labor Department reported Friday a weaker-than-expected rise in jobs of 108,000 in December after a huge gain of 305,000 jobs in November. Job production was jolted in September and October, reflecting massive layoffs in the Gulf Coast region following a string of devastating hurricanes.According to the confidence survey, consumer attitudes about their financial positions were down a slight 0.2 percent in January compared to December while positive views about current economic conditions posted an increase of 4 percent.”Current conditions” was the only one of the four categories that make up the index to post an increase in January.The confidence index is benchmarked to a January 2002 reading of 100, when Ipsos, an international polling firm, started the gauge.The overall consumer confidence index for January was based on the results of interviews with 1,001 adults surveyed this week from Tuesday through Thursday. Results of the survey had a margin of error of plus or minus 3.1 percentage points.Vail, Colorado
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