U.S. Consumer Confidence Falls Most Since February

Americans’ confidence in the economy eroded further in July amid worries about a still-stagnant job market. The report raised concerns about the overall economy and the back-to-school season.

The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index slipped to 50.4 in July, down from the revised 54.3 in June. Economists surveyed by Thomson Reuters expected a reading of 51.0. The decline follows last month’s nearly 10-point drop, from 62.7 in May, which marked the biggest since February, when the measure also fell 10 points.

The survey was taken July 1-21, beginning just as the Standard & Poor’s 500 index was falling to a nine-month low of 1,022.58 on July 2. It had risen 4.5 percent by July 21 and has since climbed an additional 4 percent.

The second straight month of declining confidence follows three months of increases.

“It’s all about jobs. That’s still the primary source of income,” said Lynn Frnaco, director of The Conference Board Consumer Research Center. “Until we see the pace of job growth pick up and consumers are confident that this is sustainable, we are not likely to see a significant pickup in confidence.”

One component of the index, which measures how shoppers feel now about the economy, declined to 26.1, from 26.8. The other barometer, which measures shoppers’ outlook over the next six months, declined to 66.6, from 72.7 last month.

The index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009.

Economists watch the number closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong recovery. A reading above 90 indicates the economy is on solid footing.

With unemployment stuck near 10 percent, Americans are skittish about spending. A continuing stream of sobering economic data — from disappointing job figures in May and June to weak housing numbers — is increasing worries that the economic recovery is stalling just as government stimulus programs are disappearing.

In particular, concerns are rising about the housing market. While the S&P/Case-Shiller 20-city home price index released Tuesday showed a 1.3 percent rise in May from April, the home buyer’s tax credit, which expired April 30, had an impact on the reading. In fact, the report warned that the recent gains in home prices are not likely to last.

The Commerce Department reported Monday that sales of new homes jumped last month, but the overall pace was the second slowest on record. On Thursday, the National Association of Realtors said sales of previously occupied homes declined in June and would keep sinking. A federal tax credit that helped sales early in the year has expired.

Economists will monitor Friday’s first reading on second-quarter domestic gross product, the broadest measure of economic growth. Only modest growth is expected. And on Aug. 6 the government is expected to report that employers eliminated 85,000 jobs in July, following a loss of 125,000 in June. Economists surveyed by Thomson Reuters on average expect the jobless rate to rise to 9.6 percent, from 9.5 percent.

Retailers had a surprisingly solid start to the year, but business has been slowing since April. Stores have had to deepen their discounts on summer clothing more than planned to make room for back-to-school merchandise. That raises concern about whether stores will have to mark down fall goods earlier than expected to get shoppers to buy.

The Conference Board survey, based on a random survey that was mailed to 5,000 households, showed that consumers’ assessment of the job market was more negative than the month before. Those claiming that jobs are “hard to get” increased to 45.8 from 43.5 percent, while those saying jobs are “plentiful” remained unchanged at 4.3 percent.

Consumers were also more downbeat about future job prospects. Those expecting more jobs in the months ahead declined to 14.3 percent from 16.2 percent, while those anticipating fewer jobs rose to 21.1 percent from 20.1 percent. The proportion of consumers expecting an increase in their incomes declined to 10 percent from 10.6 percent.

ANNE D'INNOCENZIO, AP Retail Writer NEW YORK