Confidence among U.S. consumers fell in September to a four-month low as Americans grew less upbeat about the outlook for employment.
The Conference Board’s index declined to 79.7 from a revised 81.8 a month earlier that was stronger than initially estimated, the New York-based private research group said today. The median forecast in a Bloomberg survey of economists called for a decrease this month to 79.9.
Uneven employment growth and limited wage gains are keeping consumer purchases, which make up about 70% of the world’s largest economy, from accelerating. At the same time, a pickup in household wealth reflecting improved property values and higher stock prices may help ensure Americans won’t retrench.
“The quality as well as the pace of new jobs has not been improving,” Yelena Shulyatyeva, an economist in New York at BNP Paribas, said before the report. Mortgage rates may not be “high by historical standards, but a noticeable increase” is also weighing on sentiment, she said.
Estimates of consumer sentiment ranged from 76 to 83 in the Bloomberg survey of 78 economists after a previously reported August reading of 81.5. The Conference Board’s measure averaged 53.7 in the recession that ended in June 2009. The cutoff date for the survey was Sept. 13, around the time the Obama administration was considering a military strike on Syria.
Another report today showed home prices climbed in the 12 months to July by the most since February 2006.
The S&P/Case-Shiller index of property values increased 12.4% from July 2012 after advancing 12.1% a month earlier. The year-over-year gain matched the median projection of 31 economists surveyed by Bloomberg.
The Conference Board’s barometer of consumer expectations for the next six months fell to 84.1 after 89 a month earlier. A gauge of present conditions improved to 73.2 in September from 70.9 a month earlier.
The fewest respondents since March said they expected their incomes to rise. The share dropped to 15.4% in September from 17.5% a month earlier. The share of Americans who said jobs would become more plentiful in the next six months fell to 16.9% from 17.5%.
At the same time, the gap between those who said work opportunities are currently scarce, and those who said they’re easy to get, shrank to the lowest since September 2008.
Recent improvements in the labor market have been uneven. Employers created 169,000 jobs in August, and the prior two months’ gains were revised down, Labor Department figures showed this month. The unemployment rate dropped to 7.3%, a more than four-year low, in part because workers left the labor force.
The lack of more progress in the job market was behind the decision of Federal Reserve policy makers to refrain from reducing the monthly pace of monthly stimulus. Central bankers said they need to see more evidence of sustained economic strength.
“Conditions in the job market today are still far from what all of us would like to see,” Chairman Ben S. Bernanke said following the Federal Open Market Committee’s two-day session on Sept. 18. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.”
Speculation the Fed would begin paring the $85 billion monthly pace of bond purchases has pushed up mortgage rates, threatening to slow the recovery in housing.
More Americans indicated in today’s confidence survey that they plan to buy homes and automobiles in the next six months.
The auto industry has been thriving as Americans replace older models and take advantage of dealer incentives, some of which include interest-free financing. Ford Motor Co., General Motors Co. and Toyota Motor Corp. posted U.S. sales gains in August that beat analyst estimates. The annualized pace of motor vehicle sales climbed to 16 million in August, the highest in almost six years, according to data from Ward’s Automotive Group.
While some consumers are spending on big-ticket goods such as new cars and appliances, they may be cutting back elsewhere. Retailers from Macy’s Inc. to Wal-Mart Stores Inc. cut forecasts after missing their second-quarter sales targets.
Clarence Otis, chairman and chief executive officer at Darden Restaurants Inc., owner of the Red Lobster and Olive Garden chains, referred to “guests who need more affordability,” on a Sept. 20 earnings call. “They’ve got to do some more disciplined budgeting, and dining out is one of the things that may be paying a price for that,” Otis said.
Chief executive officers reported a dimmer economic outlook in the third quarter, according to a Business Roundtable survey last week. Fewer company leaders expected a pickup in sales and capital spending in the next six months. Half of the respondents indicated that uncertainty over the budget debate in Washington may keep their companies from hiring.
Deloitte LLP, a New York-based consulting firm, said retail sales may climb as much as 4.5% this holiday shopping season, about the same as last year.
“Rising home prices with steady job creation may buoy consumers,” Daniel Bachman, Deloitte’s senior U.S. economist, said in a statement.
At the same time, it may be difficult for lower-income households to boost spending after a 2 percentage-point increase in the payroll tax at the start of the year. The poverty rate hovered close to a two-decade high, while median household income showed little change, according to a Sept. 18 report from the Commerce Department.