The falling price of gas has not been enough to offset the queasiness that Americans feel about the economy during the first half of June, with a dismal jobs landscape foremost on their minds, economists believe.
The Conference Board's Consumer Confidence Index, which is scheduled to be released Tuesday morning, is expected to show just a slight increase to 61, from 60.8 from May 1 and May 18, according to economists surveyed by FactSet. The forecast follows an almost six-point drop from May to April, which marked a six-month low.
A reading of 90 indicates a healthy economy on the index, which measures how Americans feel about business conditions, the job market and the next six months. It hasn't approached that level since the recession began in December 2007 and shift of less than five-points is generally discarded by economists as insignificant.
The index has lost momentum since earlier this year. It hovered between the high 50s and low 60s last year, and then climbed to a three-year high in February, reaching 72.
Economists, who carefully monitor consumer confidence because consumer spending accounts for 70 percent of economic activity, said high unemployment continues to weigh on Americans.
There has been a steady drumbeat of indicators showing that consumers are nervous. The government on Monday reported that consumer spending was unchanged in May compared with April. That marked the first time in a year that spending hasn't increased from the previous month.
"Even though lower gas prices have provided some relief, people are still worried about their jobs," said Mark Vitner, senior economist at Wells Fargo. "A lot of the economic data has been weak, and it has a lot of folks wondering about their job prospects."
Gas prices that neared $4 per gallon in late April and early May led many to cut back on spending for everything from televisions to clothes. But since Memorial Day weekend, gas prices have fallen to a national average of $3.57 per gallon. Oil prices have declined steeply over the last few weeks, which should eventually translate into even lower pump prices.
Still, hiring has slowed this spring after a strong start at the beginning of the year. The economy produced only 54,000 jobs in May, the lowest number in eight months. That followed three months in which employers hired an average of 220,000 net new workers each month. The unemployment rate inched up to 9.1 percent last month from 9.0 percent in April.
Moreover, prices in the food aisle remain high and this fall, shoppers will be be seeing the cost of clothing and accessories rise as retailers grapple with higher labor costs in China and soaring prices of raw materials like cotton. Stores had started to raise prices this spring but only on select items.
The Conference Board survey, conducted by The Nielsen Co., is based on a random survey mailed to approximately 3,000 households from June 1 through June 16. Survey numbers are updated after the month ends.
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