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Consumer confidence plunges, as many are too scared to spend

NEW YORK — If you're a U.S. consumer, why would you be confident?

After a string of bad news that threatens the painfully slow economic recovery, consumer confidence fell to a seven-month low in June on continuing worries about high unemployment and stagnating wages, according to a report released Tuesday by a private research group.

The Conference Board's Consumer Confidence Index slipped to 58.5 in June. That's down from a revised 61.7 in May, which marked a drop of almost 6 points from April.

"Americans still feel like they're in a recession," said C. Britt Beemer, chairman of America's Research Group. "They feel like they're driving in a car and getting hit by all sides."

A reading of 90 would indicate a healthy economy on the index, which measures how Americans feel about business conditions, the job market and the next six months. But the index hasn't approached that level since the recession began in December 2007. In fact, two years after the recession officially ended in June 2009, consumer confidence is still fragile.

"Consumers are growing increasingly worried about the near-term economic outlook," said Mark Vitner, senior economist at Wells Fargo.

Jim Horseman, 55, a railroad engineer from Avon, Ohio, is among those consumers who remain uneasy about the economy. He said he needs to buy a new car but is putting it off until next year.

"I'm not giving up my money. I'm holding on to my savings," Horseman said. "I feel much safer with my money in the bank making no interest than not having it."

Isaac Burrows, 24, who works on commission as a salesman at a Clarks shoe store in downtown Indianapolis, said he sees troubling economic signs at his job. A few years ago, he could sell $10,000 worth of shoes in a week; now he's lucky if he can sell half that.

"There haven't been any real signs that would give you that confidence," Burrows said.

Still, economists had expected the confidence index to edge up because consumers are paying less at the gas pump. But that didn't boost shoppers' mood.

Americans are most worried about the dismal job market. Hiring slowed this spring after a strong start at the beginning of the year. The unemployment rate inched up to 9.1 percent last month from 9.0 percent in April.

Economists say the Conference Board's index accurately reflects consumers' moods and spending habits when studied over a few months, instead of just one month at a time. The June survey echoes the deteriorating confidence tracked by a recent Gallup poll, which reported that Americans' economic confidence receded in early June and remains near its 2011 low.

Consumer confidence plunges, as many are too scared to spend 06/28/11 [Last modified: Tuesday, June 28, 2011 10:28pm]
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