NEW YORK — From soaring gas prices to weaker job prospects, Americans are gloomier about the economy than they’ve been since just before the U.S. invasion of Iraq. They’re so anxious that the number who say they are planning to take a vacation is the weakest in 30 years.
And those are worrying signs for the already-deteriorating economy, since eroding consumer confidence foreshadows weaker spending.
A widely watched measure of sentiment dropped to a five-year low in April, the fourth straight month of declines. The Conference Board said Tuesday that its Consumer Confidence Index fell to 62.3 in April, down from a revised 65.9 last month and 76.4 in February.
That was in line with the expectations of Wall Street economists but leaves the index at its weakest point since it registered 61.4 in March 2003, ahead of the Iraq invasion.
“There isn’t a lot for the consumers to be optimistic about,” said Gary Thayer, senior economist at Wachovia Securities.
Economists closely watch sentiment readings because consumer spending accounts for more than two-thirds of the nation’s economic activity.
According to the Conference Board, the index that measures shoppers’ current assessment of economic conditions dropped to 80.7 in April from 90.6 in March. The index that gauges their outlook over the next six months was little changed at 50.1, compared with 49.4 in March.
“This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but the economic conditions may have slowed even further,” said Lynn Franco, director of the Conference Board Consumer Research Center. “And not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns.”
Franco noted that consumers’ worries about inflationare still rising, and now match the all-time high reached in the aftermath of Hurricane Katrina in fall 2005, when gas and oil prices soared after major disruptions to energy supplies.
Thayer said gas and food prices need to drop and the job market must pick up before consumers’ mood improves.
