Consumers Bracing for Recession
Consumer confidence dropped to a 16-year-low this month, as many Americans braced for a prolonged economic downturn, the Conference Board reported this week.
In a survey of 5,000 U.S. households, 30 percent described the economy as bad, up from 27 percent in April. About a third said they expected conditions to continue declining over the next six months, the New York-based private research group said.
Lynn Franco, director of the group's consumer research center, said weakening business and job conditions, combined with growing pessimism about the future, have deflated economic confidence in recent months.
"Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead," Franco said in a statement. "As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead," she said.
Meanwhile, U.S. home prices continued to slide in March despite a slight upturn in sales last month.
Sales of new houses inched up by 3.3 percent between March and April, but remain 42 percent lower than a year ago, the Commerce Department reported this week. A total of 526,000 new homes were sold last month, compared to 907,000 in April 2007, enough for a 10.6-month supply at the current sales pace, the report said. The median sales price for new homes sold in April was $246,100.
The Case-Shiller home price index released this week by Standard and Poor showed a 14.4 percent decline in U.S. home prices in the past 12 months.