Job Worries Undercut Consumer Confidence

The weaker-than-expected December showing highlights split between present and future outlooks.
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Worries about the job market resurfaced in December.

The Conference Board's consumer confidence index fell to 91.3 in December from 92.5 in November, and although the markets shrugged off the weaker-than-expected showing, a closer look at the report suggests the economy's recovery is still unconvincing to average Americans.

The present situation index fell sharply from 81.0 to 73.9, as did the overall assessment of the current job market. Of the 5,000 people surveyed, 32.6% said jobs were hard to get, compared with 29.6% in November. Those who found jobs plentiful declined to 12.5% from 13.5%.

"Consumers' lackluster assessment of current conditions reflects continuing anxiety about labor market conditions," said the business group. "While consumers expect the job situation to improve in the months ahead, until a significant turnaround takes place, consumers' optimism about current-day conditions will continue to lag behind their expectations."

Job creation has been unusually weak and the unemployment rate slow to decline in this economic recovery. There have, however, been recent signs of improvement. The economy has created jobs in each of the past four months, while the unemployment rate has declined slightly.

For the past three months, weekly jobless claims have been below 400,000, what is thought to be the dividing line between contraction and growth in the labor market. The government Wednesday will report claims for the week ended Dec. 27, with economists expecting little change from the previous week's 353,000 level.

Whether it was jobs or overall economic conditions, consumers were more optimistic about the future than the present.

Those anticipating more jobs to become available in the next six months increased to 21.7% from 18.5%, while those expecting fewer jobs decreased to 16.9% from 18.0%. The percentage of people expecting a pick-up in business or an improvement in their income in the next six month also rose.

Two other economic reports released Tuesday were also slightly disappointing, if only because they failed to meet the consensus forecast of economists.

The Chicago Purchasing Managers Index fell to 59.2 in December from a nine-year high of 64.1 in November. The overall index did remain in an expansionary mode for the eight consecutive month, while the employment index rose to 49.6%

Finally, existing-home sales fell to 6.06 million units in November from 6.35 million in October; economists had expected a slight decline to 6.33 million. The November rate was still the fifth best on record and almost 7% higher than a year ago.