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An Erosion of Confidence

U.S. consumers appear to be increasingly worried about the labor market's health. The latest indication comes in The Conference Board's consumer confidence index for February, released Feb. 24. The headline index fell a bit more than analysts had expected, coming in at 87.3, vs. 96.4 in January (revised from 96.8) and a median estimate of 89.5. The present situation index was 73.1, vs. a prior 79.4, while the expectations measure stood at 96.8, vs. a prior 107.8.

This completes the round of major consumer sentiment surveys, which have all showed a substantial deterioration in consumer moods and expectations. The jobs-hard-to-get measure rose (32.1 vs. 31.6) -- not encouraging for those looking for big payroll gains in February -- while the jobs-plentiful measure fell (11.8 vs. 12.3). Jobs-not-so-plentiful held steady at 56.1.

HARSH SPOTLIGHT. The business conditions portion of the survey was also glum. The "good" index fell to 19.3 from a prior 21.9, while the "bad" index rose to 25.1 from 22.9. Also ominous, the expectations for business conditions six months from now deteriorated -- "better" fell to 21.8 from 27.6, while "worse" rose to 8.7 from 6.7 -- though the mix is still better than the reading for current business conditions.

Delos Smith of The Conference Board notes what's already pretty well known: People are concerned about jobs and the impact of outsourcing work to foreign countries. The jobs-hard-to-get measure is actually higher than a year ago and isn't far from the six-month average of 32.8. Still, other than a bit of noise in the data, no evidence suggests people are having an easier time finding jobs. And the spotlight on the soft job market will only get harsher amid a hotly contested 2004 Presidential campaign. From Informa Global Markets staff analysts

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