Consumer confidence at lowest level in 2 1/2 years

By Reuters

Consumer confidence unexpectedly dropped to its lowest level in two-and-a-half years in October as consumers fretted about job and income prospects.

The Conference Board, an industry group, said its index of consumer attitudes fell to 39.8 from a upwardly revised 46.4 the month before. It was the lowest level since March 2009.

Economists had expected the index to rise to 46.0, according to a Reuters poll. September was originally reported as 45.4.

The present situation index slipped to 26.3 from 33.3, while the expectations index declined to 48.7 from 55.1. The expectations gauge was also at its lowest since March 2009.

"Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement.

Consumers' view of the labor market was mixed. The number of respondents that said they found "jobs plentiful" fell to 3.4 percent from 5.6 percent. However, the "jobs hard to get" category eased to 47.1 percent from 49.4 percent.

The assessment of price increases was unchanged with expectations for inflation in the coming 12 months at 5.8 percent.

Recent better than expected manufacturing and jobs data has tempered fears the economy could lapse back into recession, with most expecting a slow pace of growth that should avoid contraction.

Analysts are hoping to get confirmation of that from U.S. gross domestic product data for the third quarter later in the week. The advance reading is expected to show the economy grew at an annual rate of 2.5 percent after a weak first half of the year, according to a Reuters poll of economists.

But the surprising drop in consumer confidence in August may suggest that the improvement in third quarter economic growth may not be sustained.

Source: http://bottomline.msnbc.msn.com/_news/2011/10/25/8479585-consumer-confidence-at-lowest-level-in-2-12-years

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