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Consumer confidence slips
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June 27, 2000: 11:07 a.m. ET
June Conference Board index falls to 138.8 after matching record in May
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NEW YORK (CNNfn) - U.S. consumer confidence declined in June after matching the all-time record the month before, as higher interest rates and a more questionable outlook on the employment front prompted Americans to downgrade their view of the economy.
 The Conference Board reported Tuesday that its key gauge of consumer confidence fell to 138.8 in June from a revised 144.7 in May. Analysts polled by Briefing.com had expected the index to slip to 140.0 for the month. The present situation index dipped to 180.2 from 183.6 in May, while the outlook for conditions six months from now shrank to 111.0 from 118.7.
The report came as Federal Reserve policy makers gathered in Washington to discuss whether the economy, now in its 10th and record year of uninterrupted expansion, needs to be cooled down with another interest rate increase. The two-day meeting concludes Wednesday afternoon.
"While the latest signals suggest that U.S. economic activity should decelerate in coming months, consumers are not expecting this record-breaking economic expansion to end any time soon," said Lynn Franco, director of the Conference Board's Consumer Research Center.
Skittish about the job market
To discourage consumers from spending, the Fed has raised short-term rates six times in the past year to boost the cost of borrowing. The Fed's key benchmark rate currently stands at 6.5 percent. Most analysts expect that recent economic evidence indicating slowing growth will persuade Fed officials to hold the line on rates.
 But offsetting higher rates have been the rising values of investments along with rising wages and benefits. While stock market volatility, particularly among high-tech companies, has caused concern among consumers, it hasn't stopped them from being optimistic down the road about their economic prospects.
What has made them skittish is the prospect of a cooling job market in the wake of anecdotal evidence of dot.com layoffs and last month's employment report, which showed the first monthly decline in non-government jobs in more than two years. Nonetheless, most analysts still are skeptical that consumers' concerns represent a notable economic slowdown.
"It would be very helpful if the drop in confidence in June marked the start of a new trend, but with the job market still very tight we cannot yet be confident about this," said Ian Shepherdson, chief U.S. economist with High Frequency Economics.
Not expecting a raise
The percentage of consumers who think their own incomes will rise in the next six months declined to 23.8 percent from 27.6 percent in May. The percentage of Americans who think jobs will become more available in the months ahead slipped to 18.4 percent from 19.6 percent.
Consumers also scaled back their buying intentions, according to the report. Those who said they plan to buy a car dropped to 7.3 percent from 10.1 percent in May, while those who said they plan to purchase a home dropped to 3.2 percent from 3.6 percent. Plans to buy major appliances were about unchanged at 32.4 percent, the report said.
As for overall economic conditions, 43.3 percent of consumers surveyed said they believe current conditions are "good," while 9.3 percent said they are "bad." The Conference Board compiles the monthly index from a broad survey of about 5,000 U.S. households. 
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The Conference Board
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