Jun 26, 2002 By Hope Yen Ap Business Writer 2 min read

NEW YORK (AP) – Consumer confidence declined in June to a four-month low, hurt by accounting scandals and concern about jobs, a private research firm said Tuesday. The New York-based Conference Board said its Consumer Confidence Index fell to 106.4 this month from a revised 110.3 in May. Analysts were expecting a reading of 106.0. The industry group’s index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation’s economic activity.

“Weak labor market conditions, generally soft business conditions and waning public confidence in questionable business practices have helped erode consumer confidence,” said Lynn Franco, director of the Conference Board’s research center. Still, she said, the figures pointed to “continued spending and moderate economic growth.”

The index compares results with its base year, 1985, when it stood at 100. June’s figure is the lowest since February, when consumer confidence stood at 95.0 amid congressional hearings investigating the Enron scandal.

After slashing interest rates 11 times in 2001, the Federal Reserve has held rates steady so far this year. Fed Chairman Alan Greenspan has said generally low inflation gives policy-makers the luxury of waiting to see how the recovery unfolds before boosting rates, and many economists believe the Fed will leave rates unchanged at their two-day meeting ending Wednesday.

The Conference Board said consumers’ assessment of the current economic climate was less favorable in June. Consumers rating current business conditions as good declined to 20.1 percent from 21.2 percent.

Meanwhile, consumers who felt business conditions were bad rose to 19.1 percent from 18.5 percent last month, the board said.

Regarding employment, those reporting jobs were currently “hard to get” increased to 23.1 percent from 21.8 percent in May. Those claiming jobs were plentiful decreased to 20.1 percent from 21.2 percent.

Americans also were less optimistic about the near future. The percentage of consumers who expect business conditions to improve declined to 23.6 percent from 24.9 percent in May, the report said. Those expecting conditions to sour rose slightly from 6.8 percent to 7.0 percent this month.

The jobs outlook for the next six months also weakened. Fewer consumers, 20.1 percent in June, expect more jobs to become available in the next six months, compared to 21.2 percent in May. Those expecting fewer jobs to become available rose to 14.2 percent from 13.6 percent.

The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members worldwide.

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