Consumer Confidence Posts Sharp Drop, Easing Concern Over Interest-Rate Rise
WASHINGTON -- Consumers are feeling somewhat less secure about the economy judging from June's drop in a key measure of consumer confidence.</br></br>The nearly six-point decline in the Conference Board's monthly index of consumer sentiment, to 138.8 from a high of 144.7 in May, strengthens the widely held belief that the Federal Reserve Board won't raise interest rates today. As the Federal Open Market Committee enters its second day of meetings, its members should welcome a sign of waning consumer optimism.</br></br>The May number, revised upward to 144.7 from a preliminary 144.4, equaled the record set in January. The index jumped seven points in May after moving up less than a point in April.</br></br>"We see a little slackening in expectations for businesses," said Lynn Franco, the economist who oversees the New York market research firm's survey of 5,000 households. "Overall it's just basically a little bit of cooling, but not enough to slide into a recession." Historically, she said, June's 138.8 reading is very strong.</br></br>Numerous reports in recent weeks, from construction to employment to consumer spending, have shown signs that the Fed's cycle of tightening may finally be reining in the galloping economy. "It points toward a slowing economy" but is "not really alarming," said Ms. Franco.