US consumer confidence hits new low

Results show US consumers concerned over market turmoil and possible recession.

    The US economy has been hit hard by the subprime
    mortgage crisis [EPA] 

    The survey - often viewed as a gauge of consumer spending, which represents the bulk of US economic activity - showed the weakest confidence since the start of the US invasion in Iraq.
    The survey's expectations index, which gauges US consumers' expectations for the future, also fell to 47.9 from 58.0.

    "Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," Lynn Franco, director of the Conference Board consumer research centre.
    "The expectations index, in fact, is now at a 35-year low, levels not seen since the [1973] oil embargo and Watergate."
    US stocks fell on the news, with the Dow Jones falling 75.71 points, or 0.6 per cent, to 12,472.93, while the Nasdaq fell 8 points or 0.34 percent, to 2,318.74.
    Meanwhile, results from the Standard & Poor's/Case-Shiller index, which tracks prices of single-family homes in 10 major US metropolitan regions, show that house prices have been growing more slowly or dropping now in the US for 19 consecutive months.
    The index's broader 20-city index also dropped 10.7 per cent in January from a year ago, making it the first time that both indexes have dropped by double-digit percentages.
    Housing slump
    US house prices have been hit hard by the nation's ongoing subprime mortgage crisis, in which mortgages, often with high interest rates, were sold to people with bad credit who then were unable to repay the loans.

    "Home prices continue to fall, decelerate and reach record lows across the nation"

    David Blitzer, Standard & Poor's

    "Unfortunately it does not look like early 2008 is marking any turnaround in the housing market, after the declining year recorded throughout 2007," said David Blitzer at Standard & Poor's.
    "Home prices continue to fall, decelerate and reach record lows across the nation.
    "No markets seem to be completely immune from the housing crisis."
    The S & P results seem to contrast with a separate report released on Monday by the US National Association of Realtors which covered existing home resales for last month, which showed a nationwide 2.9 per cent increase in sales.
    However, that report found that the average price of a single-family house was down 8.7 per cent to the previous year.

    SOURCE: Agencies


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