NEW YORK -- Intensifying worries about the job market sent consumer confidence tumbling in February, but the downturn in sentiment should not affect Americans' spending in the short term, economists said.
The Conference Board reported yesterday that its consumer confidence index dropped more than nine points to 87.3, following a rise in January to a revised reading of 96.4. That reading was the index's highest since mid-2002.
Analysts had expected a decline, but the index still came in significantly below their consensus forecast for a reading of 92.3.
"A lot of it has to do with the labor market and the fact that we're not seeing the kind of pickup in jobs that consumers had originally expected," said Scott Hoyt, director of consumer economics for Economy.com, a forecasting firm in West Chester, Pa.
The confidence reading is followed closely because consumer spending accounts for two-thirds of the economy. Consumers who feel more upbeat about the economy are likely to spend more, while those who remain pessimistic may curb their purchases.
But upcoming tax refunds and, to some extent, larger bonuses in some industries should provide the fuel for continued consumer spending for at least the next few months, by which time the job market is likely to begin picking up, Hoyt said.
The downturn in confidence bears watching, however, in an economy that has been unable to create many jobs despite robust growth, analysts said.
"Consumers remain disheartened with current economic conditions, and at the core of their disenchantment is the labor market," said Lynn Franco, director of the Conference Board's Consumer Research Center. "While the current expansion has generated jobs over the past several months, the pace of creation remains too tepid to generate a sustainable turnaround in consumers' confidence."
The lack of confidence shows that consumers are puzzled by incremental improvements in the job picture, especially as presidential candidates debate outsourcing and other economic forces that have become key issues in the campaign.
The drop-off in confidence reflects consumer uncertainty over both the current business climate and economic conditions in the coming six months.
Stocks finished lower following the release of the report. The Dow Jones industrials lost 43.25 to 10,566.37. The Standard & Poor's 500 finished 1.90 lower at 1,139.09 and the Nasdaq Composite index slipped 2.08 to 2,005.44.