NEW YORK » Americans in both the living room and the boardroom are growing more fearful about the economy, creating a Catch-22 for the job market: Shoppers won’t spend until they feel more secure, and business won’t hire until people start spending.
The eroding views were revealed yesterday by two separate surveys, one that found everyday Americans are increasingly pessimistic about jobs and another that found CEOs have grimmer predictions about upcoming sales.
"The economy is stuck in an unvirtuous cycle," said Mark Vitner, an economist at Wells Fargo. "Consumers are waiting for more jobs to be created, and businesses are waiting for consumers."
The monthly consumer confidence index from the Conference Board, a private research group, fell to 48.5 in September, its lowest point since February and down from 53.2 in August. Economists surveyed by Thomson Reuters were expecting 52.5 for September.
It takes a reading of 90 to indicate a healthy economy — a level not approached since the recession began in December 2007.
Meanwhile, a poll by Business Roundtable, an association of CEOs of big companies, found two-thirds of chief executives expected sales to grow over the next six months. That’s down from 79 percent in June.
Causing uncertainty for both groups, Vitner says, are the Nov. 2 elections, when voters worried about increasing deficits and the economy’s slow recovery will decide whether to keep Democrats in power in Congress.
The Federal Reserve’s efforts to pump up the economy and lower the unemployment rate, stuck at almost 10 percent, have fallen short. Some companies that had big rounds of layoffs during the worst of the recession, such as drugmaker Bristol-Myers Squibb Co., are still trimming work forces to bring down costs.
The CEO survey suggests companies will be wary about adding workers into 2011. Only 31 percent of CEOs said they expected to increase their payrolls in the next six months, down from 39 percent in June.
The recession is technically over — a panel of economists declared this month that it came to an end in July 2009 — but Americans are just as downbeat as they were a year ago.
While unemployment is the biggest factor in depressing Americans’ moods, they’re also dealing with tight credit and depressed home values. Home prices ticked up in July for the fourth straight month, but many cities are bracing for declines in the year ahead, according to the Standard & Poor’s/Case-Shiller 20-city home price index.