2008 record      

 

Consumer confidence fell sharply over the last month on continued job worries and fears about the future, according to the IBD/TIPP Economic Optimism Index out Tuesday.

The IBD/TIPP gauge fell 5.1% in early June to 46.2. Readings below 50 signal pessimism. The six-month outlook dived 5 points to 46, the lowest since July 2009.

The poll was conducted before and after the Labor Department said on June 4 that May nonfarm payrolls expanded by 431,000 — almost entirely due to temporary census hiring. Private-sector jobs rose just 41,000, the fewest this year, fueling concerns that the jobs recovery has stalled.

"A few hundred thousand jobs essentially in the public sector, much of that in census jobs ... don't have enough mojo" to inspire confidence, said Raghavan Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, IBD's polling partner.

Weak hiring could keep a lid on consumer spending and dampen the recovery. Sales at stores open at least a year rose a less-than-expected 2.7% vs. a year ago, Retail Metrics said last week.

GDP grew at a 3% annual rate in Q1 after a 5.6% pace in Q4. But concerns about Europe's debt crisis and waning government stimulus have tempered the outlook despite continued healthy growth in U.S. manufacturing and services.

IBD/TIPP's personal financial outlook gauge, measuring Americans' views about their own finances six months out, fell 0.5 point to 52.2, below the mid-50 readings that are considered normal.

p08062010Meanwhile, the index of confidence in federal economic policies fell 2.1 points to 40.4.

The IBD/TIPP Presidential Leadership Index fell 2.8 points to 49.5, the first negative reading of President Obama's term. Americans still have a negative view of how he is handling the economy.

There's a "general perception" that Obama's handling of the Gulf oil spill "has fallen short of some people's expectations, plus the ongoing concerns about the economy and the general concerns about the inability to do anything about the job situation," Mayur said.

He added that 28% of households have at least one member looking for a full-time job vs. 26% in May.

"The job situation is really intense," Mayur said.

But job openings rose to a 16-month high in April, the Labor Department said Tuesday.

Also, smaller firms' anxieties may be easing. A small-business optimism index rose 1.6 points in May to 92.2, the best since September 2008, just as Lehman Bros. collapsed, the National Federation of Independent Business said Tuesday. But hiring gauges and capital expenditure plans remained at recessionary levels, NFIB said.

"The performance of the economy is mediocre at best," William Dunkelberg, NFIB's chief economist, said in a written statement.

The IBD/TIPP survey showed even Democrats starting to lose faith. Their confidence gauge fell 4.3 points to 60.3. Their economic outlook dived 9.1 points to 60.9, the lowest since March 2009.

IBD/TIPP conducted the national telephone poll of 912 adults from June 1 to 6.

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