Consumers Have Iffy View of Economy

Consumers aren't feeling too sure about the economy, and that's raising concern as the critical holiday shopping season gets under way in earnest.

The Consumer Confidence Index plunged in November to its lowest level in two years, according a report Tuesday from the New York-based Conference Board.

The index dropped to 87.3, down nearly eight points from the revised 95.2 in October. Analysts had expected a reading of 91.5 in November.

The November reading was the lowest since scoring 85.2 in October 2005, when gas and oil prices soared after hurricanes Katrina and Rita flooded New Orleans and shut down a large chunk of the nation's oil refineries.

"Consumers' apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Consumer spending drives the economy in general, but the thrust is strongest at holiday time when shoppers are after just the right gift.

But that may not pan out this year. Consumers don't seem poised to go all out.

Sales for the 2007 holiday shopping season will nudge up just 4 percent to $474.5 billion, according to The National Retail Federation, marking the slowest holiday sales growth since 1992.

That is also below the decade-old average annual growth rate of 5 percent.

"With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending," said Rosalind Wells, chief economist for NRF.

Consumers are facing many economic hurdles. Record-high oil prices are causing a spike in gasoline and home-heating fuel, which ultimately constricts discretionary spending.

The anxiety is showing up in other indexes, too.

For instance, the Present Situation Index, which measures how shoppers feel now about the economy, fell to 115.4 from 118.0 in October. The Expectations Index, which measures shoppers' outlook over the next six months, tumbled to 68.7 from 80.0.

From NPR reports and The Associated Press

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