Consumer spending finally seen to falter

By David Gill -- Home Textiles Today, 1/1/2001 12:00:00 AM

NEW YORK -It finally happened. After nearly two years, the consumer confidence index actually fell below the 130 mark in December, to 128.3.

What's more, it actually fell to a level that forced even The Conference Board, the provider of this key economic indicator, to acknowledge that consumer spending is finally weakening. December actually marked the third month in a row that the index had declined, and the index has lost more than 14 points since September. Yet the board has maintained a rose-lensed view of the economy as a whole throughout this period.

Certainly, the evidence in December has been otherwise. Not only did consumer confidence continue to slip, but anecdotal evidence from the retail community is that the 2000 holiday season was disappointing for the stores.

"The latest decline suggests that consumer spending will cool further as we enter 2001," said Lynn Franco, director of The Conference Board's consumer research center.

Franco cited the decline in the overall index's expectations component, which dropped below triple digits, to 95.8 in December, from 101.2 in November. "While the overall index continues to signal economic growth," she said, "if expectations continue on this downward trend, a more severe economic slowdown may be on the horizon."

Other responses to The Conference Board's survey indicated that consumers are somewhat scared about the near future. The percentage of the 5,000 respondents to the survey who thought fewer jobs would be available in the coming months rose from 13.6 percent in November to 15.9 percent last month; at the same time, the share expecting more jobs fell from 14.7 percent to 13.7 percent.

Also, fewer respondents (27.1 percent in December, down from 28.7 percent in the previous month) thought their incomes would rise in the near term. The percentage of those expecting a decrease was 6.1 percent last month, up from 5.6 percent in November.

In terms of big-ticket items, customers thought otherwise. Even though more consumers expect their incomes to drop, and fewer expect their incomes to rise, the percentages of those planning to buy a car and a major appliance both increased-from 7.2 percent to 7.8 percent for autos; and from 27.6 percent to 28.9 percent for appliances.

Consumer confidence by region