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Consumers' gloomy view of economy hits a 5-year low
The lack of confidence isn't just about emotion -- it means it's less likely that spending will be robust.
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NEW YORK - American consumers are gloomier about the economy than at any point since just before the U.S. invasion of Iraq, as slumping housing prices and soaring fuel costs depress consumer confidence to its lowest level in five years.
The Conference Board, a business-backed research group, said Tuesday that its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February.
The March reading was far below the 73.0 expected by analysts surveyed by Thomson/ IFR and was the worst reading since the gauge registered 61.4 in March 2003, just ahead of the U.S. invasion of Iraq.
Weakening consumer confidence foreshadows weakening consumer spending, which could hurt the already faltering economy.
Meanwhile, the Standard & Poor's/Case-Shiller home price index released Tuesday indicated that U.S. home prices fell 11.4 percent in January, the steepest drop since data for the indicator was first collected in 1987. The latest decline means prices have been growing more slowly or dropping for 19 consecutive months.
The Consumer Confidence Index has been weakening since July and Lynn Franco, director of the Conference Board's research center, said further decline was likely.
"Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," she added.
Brian Bethune, chief U.S. financial economist with Global Insight in Lexington, Mass., expects the April confidence reading to be dreary, too.
"We expect overall payroll employment to decline for the third consecutive month ... and there is no immediate relief in sight for gasoline prices or other energy costs," he said in a research note.
That, he said, will mean "real consumer spending will barely creep forward in the first half of 2008," depressing the economy.
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