| Hurricans Floods Consumer Confidence |
Print this story |
Chetan Anand, 24x7 Updates
Now the citizens of world’s richest country are finally feeling the crunch of the fury of nature. According to a report, consumer confidence suffered its biggest drop in 15 years in September as Hurricane Katrina made Americans anxious about the rising costs of heating their homes and filling their gas tanks. The decline raised questions about consumer spending for the rest of this year, including the holiday shopping season.
Meanwhile, the government reported Tuesday that new home sales plunged in August by the largest amount in nine months, continuing a string of mixed signals about the health of the housing boom.
The Conference Board said its Consumer Confidence Index, compiled from a survey of U.S. households, dropped 18.9 points to 86.6 from a revised reading of 105.5 in August.
That marked the biggest slide since October 1990, when the index fell 23 points to 62.6 in the wake of the recession. The September reading was also the lowest level since October 2003, when it registered 81.7.
Analysts had expected the September reading to be 98.
The drop in consumer confidence, which followed an unexpected gain in August, was more jolting, raising more concerns about shoppers’ ability to spend in the critical fall and holiday seasons with gas prices expected to remain at $3 per gallon. That’s due to tight supplies and the fact it may take weeks to restart refineries that closed due to Hurricane Rita.
Even before Katrina slammed into the Gulf Coast Aug. 29, consumers were struggling to fit higher gasoline prices into their budgets, with that strain showing up in August’s modest retail sales gains. Sales have been disappointing again this month, and analysts are concerned that consumers will further retrench when they start paying home heating bills.
Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.
However consumers were advised not to go by confidence figures entirely as the primary factors of employement and income defining spending patterns are holding very well.
While there have been job losses along the Gulf Coast as a result of Katrina’s fallout, economists predict overall healthy job gains of 169,000 when the Labor Department reports its figures Oct. 7.
Still, how fast consumer sentiment will rebound to the 100 reading seen over the past year remains to be seen.
Lynn Franco, director of The Conference Board’s Consumer Research Center, noted that as rebuilding efforts in the aftermath of Katrina take hold and job growth gains momentum, confidence should return to "more positive levels by year-end or early 2006."
"Historically, shocks have had a short-term impact on consumer confidence," she said.
One component of the Conference Board report, which examines consumers’ views of the current economic situation, fell to 108.9 from 123.8. Another component, the Expectations Index, which measures consumers’ outlook over the next six months, dropped to 71.7 from 93.3 last month.
The Conference Board index is derived from responses received through Sept. 20 to a survey mailed to 5,000 households in a consumer research panel. The figures released Tuesday reflect responses from at least 2,500 households.
|
| Bush Gives a Thumbs Up to Progress in Iraq - Sep 29, 2005 2:28 IST |
|
President Bush today claimed progress in the war in Iraq, citing the killing Sunday of a top insurgent leader in Baghdad and growing capabilities of Iraqi troops. But he repeated a warning that upcoming votes in Iraq may be accompanied by a surge of violence.
|
| Porsche Vroooooms, Buys 20% Stake in VW - Sep 26, 2005 16:24 IST |
|
German sports car maker Porsche plans to buy 20 percent stake in VolksWagen to avert possible hostile takeover of VolksWagon that could threaten the two carmaker’s business ties. The reason for this step is the fact that Volkswagen in the meantime has become not only an important development partner for Porsche but also an important supplier for some 30 percent of Porsche’s sales volume," Porsche said in a statement.
|
| Bankruptcy Laws Spruced Up - Sep 26, 2005 16:19 IST |
|
An internet clock like an eternal clock is running on bankruptcy attorney Mark Zuckerberg’s computer, counting down the days, hours, minutes and seconds until new federal bankruptcy laws take effect. The impending changes have a flood of Hoosiers rushing to file bankruptcy -- and Zuckerberg longing for his 18-hour days to subside.
|
| Boeing at Peace with Striking Machinists - Sep 26, 2005 16:18 IST |
|
|
The Boeing Co. and its machinists union have reached a tentative contract agreement, which if approved would end a three-week strike that shut down the company’s airplane production. Mark Blondin, president for Machinists District Lodge 751 in Seattle, said members would vote on the deal Thursday.
|
| At Ease! Rita Spares Refineries - Sep 26, 2005 16:18 IST |
|
Hurricane Rita caused some damage to oil refineries near the Texas-Louisiana border and raised the prospect of gasoline shortages and higher prices during the arduous process of restarting refineries all along the Gulf Coast. But it did not cause the widespread destruction of the energy infrastructure that some had feared. On the edge of this workaday city of refineries and modest ranch houses near Galveston, a flare burned silently from a tower at the large BP refinery on Saturday afternoon, evidence that it was largely unscathed.
|
| Are Charities Geared Up For Rita? - Sep 24, 2005 9:38 IST |
|
|
The American Red Cross asked Americans to give more to help hurricane victims, saying the $853 million donated for Katrina is less than half what’s needed. Rita will require even more. "We have a long way to go in our fundraising to meet the needs of people from Katrina, let alone what we need to do for the people of Rita," Senior Vice President of Preparedness and Response Joe Becker said Friday. "As fast as the money is coming in, we are spending it."
|
| Houston Joins Evacuation as Rita Strengthens - Sep 22, 2005 16:42 IST |
|
|
Hurricane Rita is heading for what could be a direct hit on the Texas Gulf Coast in three days, and has already strengthened to a category 5 storm, the most powerful and potentially devastating in life and property,
|
| Extradition Approved for London Bombings Suspect - Sep 13, 2005 19:11 IST |
|
|
Rome, Italy(24x7updates) -- Highest Court of Italy has upheld the extradition of Hamdi Issac, a suspect in the failed July 21 bombing attempts in London. He was captured later in the city of Rome.
|
| US, Iraqi Forces Attack Tal Afar, 150 Dead - Sep 11, 2005 20:14 IST |
|
Baghdad -- Iraqi and US troops pressed on Saturday with an all-out offensive to wrest control of a town from Sunni Arab insurgents, with the Iraqis reporting nearly 150 rebels killed and the town mayor resigning in protest.
|
| John G. Roberts to Replace William H. Rehnquist as Chief Justice - Sep 5, 2005 23:28 IST |
|
|
Washington (24x7Updates) -- President Bush nominated Judge John G. Roberts Jr. today to replace Chief Justice William H. Rehnquist, whose death late Saturday opened a second vacancy on the Supreme Court and a new front in the ideological battle over the judiciary.
|
| Indonesia Airliner Carrying 109 Crashes on Take-Off - Sep 5, 2005 11:2 IST |
|
|
Jakarta (24x7Updates) -- An Indonesian Boeing 737-200 operated by low cost airline Mandala Airlines crashed soon after taking off from Polonia airport in the northern city of Medan on Sumatra Island.
|
| 3 Carnival Cruise Ships Deployed for Refugees - Sep 4, 2005 17:56 IST |
|
|
Carnival Cruise Lines announced Saturday that the U.S. government has chartered three luxury cruise liners - Ecstacy, Sensation and Holiday - for the next half year, to provide temporary housing for victims of Hurricane Katrina.
|
| Bush pumping in more support for Gulf Coast - Sep 3, 2005 22:34 IST |
|
|
Washington (24x7Updates) -- President Bush, seeking to stem criticism that a slow federal response has contributed to needless misery, said Saturday he is ordering additional active duty forces to the hurricane-battered Gulf Coast.
|
| European Union seeks to address Turkey Membership Talks - Sep 2, 2005 19:40 IST |
|
|
Foreign ministers of the European Union (EU) will meet on Thursday seeking to remove last-minute obstacles to membership talks with Turkey, the British Broadcasting Corporation reported.
|
| 843 Dead in Baghdad Stampede - Sep 1, 2005 8:6 IST |
|
THE death toll in the worst single loss of life since the start of the Iraq war was last night heading towards 1,000 after a crowd of about one million Shiite pilgrims making their way across a bridge in Baghdad panicked at reports of a suicide bomber in their midst and stampeded.
|
|
|
|
|
