Consumer Confidence Is Low
Everyone across the U.S. is subdued at the gas prices that for 10 months have been rising and falling and the problems with the housing market. Economists are hoping that these problems with soon get better. “There is too much uncertainty. That is the mindset of consumers right now,” said Brian Bethune, economist at Global Insight.
“Consumers are kind of in a schizophrenic zone, where the job market is good, they’re getting reasonably good pay increases but at the same time they are getting hit with higher gasoline prices and the housing market is still not looking good,” Bethune added. Facing uncertainties, some consumers are feeling angst, watching their budgets more closely and turning cautious, he said.
The RBC Cash Index showed that consumer confidence dropped to 81.4 in June. That was weaker than May’s 87.1 and was the worst showing since last August, when fears about record-high energy prices gripped consumers. The index is based on the results from the international polling firm Ipsos.
The ebbing in confidence comes as the public gave President Bush a job-approval rating of just 32 percent in June, matching an all-time low in a separate AP-Ipsos poll. On the economy, only 37 percent approve of his performance, tying a record-low set in November 2005.
Consumers’ growing uneasiness comes as the economy has endured a nearly yearlong sluggish spell, mostly reflecting troubles in the housing and automotive industries. Economic growth nearly stalled in the first three months of this year, logging a pace of just 0.6 percent, the worst in more than four years, the government reported last week.
Still, Federal Reserve Chairman Ben Bernanke predicts the economy will rebound. Private forecasters expect growth in the current April-to-June quarter anywhere from a 2.3 to beyond a 3 percent pace. Yet consumers continue to feel anxious about the future.
Gasoline prices in early June came to $3.16 a gallon nationwide, the Energy Department says. That was a bit of an improvement from the $3.21 a gallon seen at the end of May but still packed a wallop to consumers’ wallets and pocketbooks.
The anticipated rebound in economic growth in the current quarter is expected to be powered mostly by businesses ramping up spending and investment after clamping down in the first quarter. Consumers whose brisk spending prevented the economy from stalling out altogether in the first quarter are expected to be more subdued.