WASHINGTON (AFP) — US consumer confidence plunged in June amid growing concerns about jobs and the economy, with one gauge of future expectations hitting an all-time low, the Conference Board reported Tuesday.
The business research firm said its monthly index of consumer confidence, which has slid all year, fell to 50.4 points in June from 58.1 points in May.
The June consumer confidence reading was the fifth weakest since the launch of the index in 1967. The decline in confidence was steeper than the expected 57.0 point reading forecast by most analysts.
"Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear," said Lynn Franco, consumer research director at the Conference Board.
"Looking ahead, consumers' economic outlook is so bleak that the expectations index has reached a new all-time low. Perhaps the silver lining to this otherwise dismal report is that consumer confidence may be nearing a bottom," she said.
The dire report comes ahead of government data Friday on consumer spending, which accounts for two-thirds of US economy activity.
"These very low readings for consumer sentiment are generating a distinct impression that there is another heavy shoe to drop with respect to consumer spending momentum in the second half of 2008," said Brian Bethune, an economist at Global Insight.
Both major components of the index tumbled sharply in June. The present situation index, which measures how consumers feel about current conditions, fell to 64.5 from 74.2 in May.
The expectations index, which measures consumers' outlook for the next six months, fell to 41.0 from 47.3 in May.
"The US consumer is clearly affected by several adverse shocks: tightening in credit conditions, falling housing wealth, rising gasoline prices and increasing unemployment rate," said Natixis economist Amine Tazi.
The survey of 5,000 households found the number of consumers claiming business conditions are "bad" increased to 32.5 percent from 29.7 percent, while those finding "good" business conditions declined to 11.5 percent from 13.0 percent.
Those saying jobs are "hard to get" climbed to 30.5 percent from 28.3 percent. Those calling them "plentiful" slid to 14.1 percent from 16.1 percent.
Looking ahead six months, consumers expecting business conditions to deteriorate rose to 33.9 percent from 32.9 percent. Only 8.8 percent said they anticipated an improvement, down from 10.6 percent.
Those expecting fewer jobs increased to 35.5 percent from 32.3 percent, while those foreseeing more jobs fell to 8.0 percent from 9.0 percent.
The number of consumers expecting their incomes to increase fell to 12.3 percent from 14.1 percent.
"These responses indicate a weak view of future labor market conditions, continued expected energy and other cost increases, and increased pessimism on real wage gains, a troublesome combination of cyclical and longer term pessimism," said Peter Kretzmer, senior economist at Bank of America.
The report coincided with the Federal Reserve's opening of a two-day interest rate meeting expected to leave rates unchanged amid rising inflationary pressures and weak growth.
The Federal Reserve Open Market Committee has slashed its federal fund rate by 3.25 percentage points since September to battle headwinds from housing and credit crises.
On April 30, the FOMC lowered the key rate by a quarter point to 2.00 percent, its lowest level since November 2004.
The Commerce Department is to issue Thursday a final reading on first-quarter economic expansion. Growth was upwardly revised to 0.9 percent in late May, from an initial estimate of 0.6 percent.
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