Consumer Confidence in U.S. Drops to Record Low as Unemployment Increases

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U.S. Economy: Confidence Sinks to Record Low on Jobs (Update1)
By Shobhana Chandra and Bob Willis


Dec. 30 (Bloomberg) -- Consumer confidence sank to the lowest level in at least 41 years this month as Americans grew more concerned about keeping their jobs and paying their mortgages, raising the risk they’ll spend less next year.

The Conference Board’s sentiment index unexpectedly fell to 38, the lowest reading since records began in 1967, the New York- based private research group said today. Another report showed that a drop in home values accelerated in October as credit dried up.

Economists had been counting on a plunge in gasoline prices to improve consumers’ moods. The decline in confidence signals that spending will tumble further next year and prolong the recession after a holiday shopping season that may have been the worst in at least four decades.

“The deterioration going on right now in the labor market made people feel much worse,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “If people are worried about their jobs, they are not going to spend. That is extremely negative.”

The confidence figure was projected to increase to 45.5 from a previously reported 44.9 for November, according to the median of 52 projections. Estimates ranged from 40 to 51.1.

Stocks briefly pared gains after the reports, then resumed a rally sparked by the government’s announcement yesterday of plans to shore up General Motors Corp.’s finance arm. The Standard & Poor’s 500 index rose 2.4 percent to close at 890.6. Treasury securities rose, pushing yields toward record lows. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601068&sid=anyyqSyZTU28&refer=home

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