A decline in the consumer index may bode ill for Bush

American consumer confidence plummeted in October, according to a private survey of 5,000 households conducted by the Conference Board.

The index fell to 92.8 from 96.7, making October the third straight month of decline. The new rating is the last before next week’s US presidential election and is being closely watched for earnings announcements.

The Conference Board report said the decline was a sign of nervousness about jobs and incomes, which could send a negative signal for President George W. Bush’s re-election. At the time of Bush’s inauguration in January 2001, the rate was 115.7, but has fallen as job growth has slowed and oil prices have risen.

Waiting for something

According to AMR Research analyst Fenella Scott, the consumer index reflects business expectations. It produces regular reports on spending prospects among information technology executives and said it has seen “a slight decline in spending over the last 12 months.” But Scott has seen this before in election years.

“They operate in a wait-and-see mode and are more cautious about implementing what is already planned in the budget,” she said.

Historically, re-election campaigns have failed when the rate remains below 99. When Bill Clinton defeated President George H. W. Bush in 1992, it was 54.6.

Lynn Franco, director of the Conference Board’s Center for Consumer Research, said the main factor in the index’s decline is muted expectations as opposed to erosion of current conditions.

Career concerns

The percentage of consumers expecting their incomes to improve in the coming months fell to 18.4% from 20.0% last month.

Employment prospects also deteriorated. The percentage of consumers expecting fewer jobs in the coming months increased to 18.4% from 16.2%, while the percentage of consumers expecting more jobs dropped to 16.5% from 17.8%.

The Conference Board’s Franco commented that consumers’ improvement in job market ratings showed moderate improvement, but not enough to ease their concerns about job growth.

The number of consumers planning to buy a car increased to 7.4%. from 6.3 percent, but the number of people buying houses decreased slightly. The number of plans to purchase large household appliances dropped to 27.1%. with 29.8 percent

Conference Board research found the lowest levels of trust in Pennsylvania, Wisconsin, Michigan and Ohio, and the highest in the South, including Florida.

Bureau of Economic Analysis economist Jeffrey Crawford said the consumer confidence index has “no impact on other statistics.”