Consumer Confidence Falls as Job Outlook Remains Weak
New York-based The Conference Board, a private research group, has reported that American consumer confidence in the economy dipped in September as short-term doubts about hiring and salary increases rose. The group’s consumer confidence index fell from 81.8 in August to 79.7 in September; a healthy confidence level is one of 90 or more. And while still at recent record highs, consumer confidence levels are disproportionately important to the economy since consumer spending makes up 70 percent economic activity.
Recently, economic growth has slowed while higher interest rates slow home sales. In August, the economy gained 169,000 jobs and the unemployment rate fell to 7.3 percent, largely due to fewer people looking for work. This tepid outlook is the primary reason the Federal Reserve has decided to continue its $85 billion monthly purchase of treasury bonds, which helps to keep interest rates low to make home buying and other purchases requiring consumer loans more affordable and attractive.
Increased taxes, federal spending cuts, and an overall weak global economy have contributed to the slowed economic growth. During Q2 2013, the economy grew at an annual rate of 2.5 percent. Predictions for the current quarter place growth at a slowed 2 percent or lower.