NEW YORK – So much for optimism. A dramatic drop in consumer confidence sent stocks plunging Tuesday and left a key index at its lowest level of the year, heightening fears that the economic recovery is stalling.
The nation is in no mood to spend its way back to growth, but businesses have been cautiously building up inventories to prepare for increasing demand as the economy improves. Now they're left with a question: Who's going to buy all the cars, dishwashers and clothes heading to stores and showrooms?
The Consumer Confidence Index came in at 52.9 in June, a jarring decline from 62.7 in May, according to a survey released Tuesday by the Conference Board, a private research group. It was the biggest drop since February and came on top of several gloomy economic developments in recent days.
"We need the consumer to spend, and right now declining confidence is not the prescription for a stronger economy," said Joel Naroff, president of Naroff Economic Advisors. "This was a bad report, no matter how you slice it."
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