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Ahead of the Bell: US Consumer Confidence

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October 29, 2013 06:41 AM EST | AP

WASHINGTON (AP) — The private Conference Board reports on U.S. consumer confidence in October. The report will be released at 10 a.m. EDT Tuesday.

ANOTHER DROP: Economists forecast that confidence fell to 75 this month, according to a survey by FactSet. That would be the second straight drop and down from 79.7 in September.

CAUTION GROWS: Americans became more confident in the spring as job gains were healthy and economic growth improved. The Conference Board's measure reached 82.1 in June, the highest in 5 ½ years. That's still below the reading of 90 that is consistent with a healthy economy.

SHUTDOWN HITS CONFIDENCE: Economists expect the 16-day partial government shutdown pushed confidence lower this month. Consumers' confidence is closely watched because their spending accounts for 70 percent of economic activity.

The shutdown already caused a drop this month in the University of Michigan's measure of consumer sentiment. Americans made more negative references to the federal government's impact on the economy in October than at any time in the 50-year history of the survey, the university said.

Falling confidence can cause Americans to spend less, which would slow the economy, though the relationship isn't automatic.

Slowing job growth is also weighing on consumers' outlook. Employers added an average of just 143,000 jobs a month from July through September. That's down from 182,000 a month in April through June and 207,000 in the first three months of the year.

Still, several factors will likely push confidence higher than it would be otherwise. Gas prices have dropped to a nine-month low, according to Capital Economics. The average national price for a gallon of regular gas was $3.29 on Monday. That's 12 cents lower than a month ago.

Mortgage rates have also fallen this month after reaching a two-year high over the summer. And stock prices reached record levels on Friday, after falling in the first week of October.

Sluggish spending is likely to weigh on economic growth. Most economists predict growth slowed in the July-September quarter to an annual rate of about 1.5 percent to 2 percent, down from a 2.5 percent rate in the April-June quarter. And the shutdown is likely to keep growth at a tepid pace for the final three months of the year.