New York, NY, Dec. 31--Consumer confidence declined in December, largely because of the discouraging employment outlook, according to the Consumer Confidence Board.
The New York based Conference Board said its Consumer Confidence Index dropped to 80.3 from a revised 84.9 in November, when the index reversed a previous five month long downward trend. Analysts had been expecting a reading of 88.0 in December.
Rising oil prices, the heightened threat of war in Iraq and recent tensions between the United States and North Korea over that country's nuclear weapons program also soured consumers' sentiment, said David Watt, a Toronto-based economist for BMO Nesbitt Burns.
Consumer confidence perked up in November because the stock market was rising, Watt said, but the optimism dissipated as those equity gains evaporated in December.
Lynn Franco, director of the Conference Board's consumer research center, said "The major factor dampening consumers' spirits has been the rising unemployment rate and the discouraging job outlook.
"Weak retail sales over the holidays clearly reflect the current mood of consumers. Until there is an improvement in labor market conditions, there is not likely to be a significant upturn in consumer confidence."
The Conference Board's index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.
The outlook for jobs was particularly grim, with 20.2% of consumers saying they expect fewer jobs to open up in the next six months, up from 18.8% in November. Those expecting more jobs fell to 15.1% from 15.4%.
Income expectations were dour, with 18.7% of consumers anticipating a rise in their incomes, down from 19.4% a month ago.
The Conference Board report showed waning optimism about current economic conditions, too.
The number of consumers rating current conditions as good fell to 14.6%, down from 16.1% in November, while the number sizing up the conditions as bad remained steady at 26.0%.
On the positive side of the ledger, the number of consumers expecting an improvement in business conditions in coming months grew to 20.8% from 20.3% a month earlier. Respondents who held the opposite view declined to 11.0%, down from 11.3% in November.
