Consumer Confidence Index Drops Despite Decreasing Gasoline Prices

A private research group shows that consumer confidence dropped in the month of June for the fourth consecutive month, as concerns about employment and the entire economy offset the reduction in gasoline prices and the slight betterment of the housing industry.

The decrease was moderate. Recently, the Conference Board said that there was a drop in the May to June consumer confidence index, from 64.4 to 62. However, the decline in four months from February’s 71.6 is important, and is consistent with the reduced hiring by U.S. firms during the same interval.

The index is observed by many since consumer spending comprises 70% of economic activity in the United States. A reading of 90 signifies a good economy. In February of 2009, the index reached 25.3, which is the lowest to date.

According to the most recent survey, Americans continue to worry about slow hiring, low house values, volatile stock markets and the worsening economy of Europe, even if gasoline prices are lower, because they fear that all these will be damaging to the United States.

Alyson Seligmen from Palm Beach Gardens Florida agrees to that, saying that lower current gas prices have not made her feel more confident of the economy.

Concerns about the growth of jobs and income affect Americans the most, according to a survey performed from June 1 to 14 on 500 randomly chosen participants all over the country. The index’s margin of error is + or – 5.5 points.

Those saying that it is difficult to find jobs slightly increased, from 40.9% to 41.5%. Meanwhile, those anticipating additional jobs in the coming months dropped from 15.4% to 14.1%. The number of consumers anticipating a rise in their incomes fell from 15.7% to 14.8%.

The declining consumer confidence since the month of February coincides with a sharp decrease in hiring. The total hiring average from March, April and May is 96,000. That shows a huge fall from the 252,000 monthly average in the three months before that.

The strong winter hiring helped increase the Consumer Confidence Index, from October’s 40.9 to the highest reading in one year during the month of February. However, hiring fell in the next few months as well as consumer confidence.

In the meantime, a measure showing the number of individuals seeking unemployment benefits in the previous month has reached its highest in six months, said the government in the past week.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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