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U.S. consumer confidence plunged more than 10 points in February, raising concerns about the outlook for consumer spending, according to a report released Tuesday.
Separately, U.S. home prices fell in December but were up when adjusted for seasonal factors, according to the S&P Case-Shiller home-price indexes, as yearly declines continued to ease.
The Conference Board, a private research group, said its index of consumer confidence declined to 46.0 this month, from a revised 56.5 in January, first reported as 55.9. The February reading was far below the 54.8 expected by economists surveyed by Dow Jones Newswires.
The present situation index, a gauge of consumers' assessment of current economic conditions, fell to 19.4 this month from 25.2 in January, originally reported as 25.0. The February index was the lowest in 27 years.
Consumer expectations for economic activity over the next six months dropped to 63.8 from a revised 77.3, first reported as 76.5.
"Fewer consumers [are] anticipating an improvement in business conditions and the job market over the next six months," said Lynn Franco, director of the Conference Board Consumer Research Center. "Consumer also remain extremely pessimistic about their income prospects."
Sentiment about the current labor markets took a direct hit in February, even as government data for January showed some improvement in the jobless rate. The percentage of respondents who think jobs are "hard to get" rose to 47.7% in February from January's 46.5%. And those who think jobs are "plentiful" fell to 3.6% from 4.4%.
The employment outlook did not fare any better. The percentage of consumers expecting more jobs in the months ahead fell to 13.4% from 15.8%, while the proportion expecting fewer jobs jumped to 24.6% in February from 18.9% in January.
The report also showed 17.2% of respondents expect their incomes to fall over the next six months, and only 9.5% expect an increase.
"The combination of earnings and job anxieties is likely to continue to curb spending," said Ms. Franco.
Home-Price Declines Slow
For the fourth quarter, the S&P Case-Shiller U.S. National Home Price Index posted a 2.5% decrease from a year earlier, a significant easing from the 19%, 15% and 8.7% declines in the rest of 2009. It fell 1.1% sequentially but rose 0.3% adjusting for seasonal factors.
The indexes showed prices in 10 major metropolitan areas fell 2.4% in December from a year earlier, while the index for 20 major metropolitan areas dropped 3.1%. Both indexes dropped 0.2% from the previous month, although adjusted for seasonal factors, they increased 0.3%.
David M. Blitzer, chairman of S&P's index committee, said that the housing market is "definitely in better shape" and that the pace of deterioration has stabilized. But the rate of improvement seen during the summer hasn't survived.
"We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally adjusted data, where 14 of the markets and the two monthly composites all rose in December," he said.
Nationally, home prices are at levels similar to summer of 2003.
Compared with a year earlier, Las Vegas continued to be hit the hardest, posting a drop of 21% in home prices. Tampa and Detroit followed with declines of 11% and 10%, respectively. The best year-on-year performer was San Francisco, which posted a 4.8% climb.
Month-to-month gainers were led by Los Angeles, which rose 1%. Chicago again fared worst, falling 1.6%.
Recovery in the U.S. housing market has been fragile. Demand for new and used homes, after strengthening in earlier months, dropped in December because of cold weather and continuing joblessness. Though housing starts sprang up again in January, an indicator of future groundbreaking fell. In addition, buyers sought to wrap up home purchases before a federal tax credit was set to expire in November, pulling some sales in earlier.
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