Wednesday, June 25, 2008

US Consumer Confidence sinks again as Boost From Stimulus Checks Wane

As reported on Style Sight/ June 24th 2008
A stimulus check can only go so far when gas and food prices only continue to rise. New data released from the Conference Board showed that U.S. consumer confidence took an even further dive in June to 50.4 on its index measurement following its declines in May that placed the reading at 58.1, making it the fifth lowest reading ever recorded since 1992 and lower than the 56 reading economists had forecast. In related news, German consumer confidence also dropped to its lowest levels in more than two years today as soaring energy prices sapped people’s purchasing power, reported Bloomberg.

“Consumers’ assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear,” director Lynn Franco of the Conference Board Consumer Research Center said in a statement, adding that the silver lining may hopefully be that confidence levels “may be nearing a bottom.”
Consumers’ assessment of present conditions also grew dimmer in June with the Present Situation Index decreasing to 64.5 from 74.2 and the Expectations Index down to 41.0 from 47.3 in May.
“The confidence reading is grim,” chief U.S. economist Joshua Shapiro with Maria Fiorini Ramirez told Bloomberg. “Sure we’ll get a bump up from the tax rebates, but once that is over, we’re facing what is increasingly looking like an air pocket for consumers.”
In Germany, the consumer confidence index declined to 3.9 in July from a revised 4.7 in June, falling below the predicted 4.6 levels from economists. Similar problems to what Americans are facing are dampening German moods; rising food and gas prices. Inflation accelerated to 3.1% last month.
“The biggest problem for consumers is high inflation, the price increases for energy and food,” GfK Chief Executive Officer Klaus Wuebbenhorst told Bloomberg. “People buy food every day. Price rises for food therefore add to perceived inflation.”
Oil prices reached a record $139.89 a barrel last week and traded at $136.88 a barrel today. `

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