NEW YORK (Reuters) - The U.S. economy continued its run of record-breaking dismal data Tuesday, with consumer confidence and home prices registering a pair of grim milestones.
U.S. consumer confidence fell to a record low in December as the worst job market in 16 years hammered sentiment, the Conference Board business research company said.
The dour sentiment has had a harsh impact on spending. The U.S. holiday shopping season is the worst since at least 1970 due to the recession, the International Council of Shopping Centers said.
Prices of U.S. single-family homes in October posted a record fall of 18.0 percent from a year earlier, according to the closely watched Standard & Poor’s/Case-Shiller Home Price Indices.
Business activity in the U.S. Midwest continued to shrink in December but at a less severe rate than expected, and input prices fell sharply.
The data was the latest reminder that the U.S. economy is in for a tough slog after a year-long recession, which many expect to continue during the first half of 2009.
“Really at this point we are not going to be seeing anything fundamentally positive from the U.S. for the time being,” said Michael Woolfolk, senior currency strategist at the
On
The Institute for Supply Management-Chicago business barometer rose to 34.1 for December from 33.8 in November. The reading was better than the 33.0 economists had forecast, but was still well below the 50 level that separates expansion from contraction.
“RAPID AND STEEP DETERIORATION”
The Conference Board said its Consumer Confidence Index fell to 38.0 in December from a slightly downwardly revised 44.7 in November.
The median forecast of economists polled by Reuters was for a reading of 45.0. Their 62 forecasts ranged from 40.0 to 51.1.
“The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.
“The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.”
Chief among consumers’ woes has been spiraling job losses in recent months.
U.S. employers axed 533,000 jobs from payrolls in November alone, the most in 34 years, according to Labor Department data released earlier this month.
The Conference Board data reflected this, with its “jobs hard to get” index rising to 42.0 in December — the highest since December 1992. That was up from 37.1 in November.
Not surprisingly, consumers also rated their present situation poorly, with the index of this measure tumbling to 29.4 — its lowest since April 1992 — from November’s 42.3.
Sales at U.S. chain stores fell 1.8 percent in the week ended December 27 compared with the previous year, while sales fell 1.5 percent compared with the prior week, according to the ICSC-Goldman Sachs Weekly Chain Store Sales index.
The ICSC expects holiday sales in November and December to fall 1.5 percent to 2 percent versus the year-ago period. That would represent the first decline since the ICSC began tracking holiday sales in 1969.
“BEAR MARKET CONTINUES”
The Standard & Poor’s/Case-Shiller composite home price index of 20 metropolitan areas fell 2.2 percent in October from September. The price drops, both on a year-over-year and month-over-month basis, came in worse than expected, based on a Reuters survey of economists.
S&P said its composite index of 10 metropolitan areas dropped 2.1 percent in October from September for a 19.1 percent year-over-year drop, also a record.
Many economists say arresting the slide in home prices is key to halting the economy’s slump, which was caused by the bursting of this decade’s housing bubble.
“The bear market continues; home prices are back to their March, 2004 levels,” David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, said in a statement.
(Additional Reporting by Ros Krasny in Chicago, Julie Haviv and Nick Olivari in New York; Editing by Dan Grebler)
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