Consumer confidence sags while housing remains shaky
February 23, 2010 Leave a comment
NEW YORK (Reuters) – Consumer confidence sagged to a 10-month low on worries about jobs while the housing market remains under strain, data revealed on Tuesday, underscoring the fragility of the economy’s recovery.
Consumer confidence fell in February to the lowest in 10 months, as consumers’ short-term outlook on jobs worsened, according to a report from an industry group.
The Conference Board said on Tuesday its index of consumer attitudes fell to 46.0 in February from a revised 56.5 in the prior month. February’s reading is the lowest since April 2009.
The median of forecasts from analysts polled by Reuters was for a February reading of 55.0.
“This is just a flat-out bad report,” said Tom Porcelli, senior economist at RBC Capital Markets in New York.
“I think if you’re looking for signals for consumer spending or jobs, there are no positive signals here,” Porcelli added. “In fairness we’re going through a pretty tough recovery and we know that, but I think this is a reminder that the recovery’s going to be very uneven.”
Investors sold shares across the globe after the data, while the dollar rose against the euro and Treasuries prices gained.
Consumers’ assessment of the labor market worsened. The Conference Board’s “jobs hard to get” index rose to 47.7 percent from 46.5 percent, while the “jobs plentiful” index fell to 3.6 percent in February from 4.4 percent in January.
The expectations index fell to 63.8 from 77.3, while the present situation index dropped to 19.4 from 25.2 in January, the worst since February 1983.
“Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers also remain extremely pessimistic about their income prospects.”
Adding to worries about the economy, the latest reading of Standard & Poor’s/Case-Shiller indexes showed U.S. home prices unexpectedly slipped in December, but the annual rate of decline slowed, reinforcing the housing market’s uneven path to recovery.
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.
A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.
U.S. commercial real estate is unlikely to show meaningful recovery before next year, a Realtors group said on Tuesday, citing high vacancy rates.
The National Association of Realtors said many property owners would be forced to make concessions on rent.
There was also bad news on the banking sector as regulators reported on Tuesday that the number of “problem” U.S. banks jumped 27 percent during the fourth quarter of 2009 to 702. That was the highest level since 1993 and a sign the industry’s recovery is still shaky as smaller institutions struggle with deteriorating loan portfolios.
(Additional reporting by Lynn Adler and Emily Flitter; Editing by Padraic Cassidy)