Consumer Confidence Continues Slide

High Gas Prices, Poor Job Prospects Send Index To Lowest Level In Nearly 16 Years

(CBS/AP) 

---

Americans are in a real funk, about the economy, and their own finances.

And here are two big reasons: a report today says the biggest investment most of us ever make -- our homes -- has fallen in value this year by more than 14 percent -- the biggest drop in at least 20 years; and gasoline prices are setting records by the day. Today, it's a nationwide average $3.94 a gallon.

All that has helped to send consumer confidence in the economy to the lowest level in nearly 16 years, reports CBS News Business Correspondent Anthony Mason.

---

The downward slide for home prices is picking up speed. The 14 percent plunge nationally was led by Las Vegas, where prices have fallen more than 25 percent over the past year. Miami is down more than 24 percent, and Phoenix more than 23 percent. Among the 20 major cities surveyed, only Charlotte, N.C. showed a meager 1 percent gain over the past year. And analysts can't see a bottom yet.

"There are not enough hints of better things to be able to say, yeah, we're almost there," says David Blitzer of Standard & Poors, told Mason. "So hold your breath for a little longer."

"How much longer?"

"Generally for the country as a whole, house prices'll be weak probably for the next year or two," says Larry Kantor of Barclays Capital.

In just two years, as home prices have dropped 15 percent, more than $3 trillion in home values have been wiped away. As those values have plummeted and gas prices have skyrocketed, Americans have been raiding their 401k retirement plans to raise cash. The number of 401k borrowers has doubled, from 9 percent in 2005 to 18 percent last year.

Soaring gas prices and weakening job prospects left shoppers gloomier about the economy in May, sending a key barometer of consumer sentiment to its lowest level in almost 16 years.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 57.2, down from a revised 62.8 in April. Economists surveyed by Thomson Financial/IFR had expected a reading of 60.

The May reading marks the fifth straight month of decline and is the lowest since the index registered 54.6 in October 1992 when the economy was coming out of a recession.

Economists closely watch sentiment readings since consumer spending accounts for more than two-thirds of the nation's economic activity.

"Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy," Lynn Franco, director of the Conference Board's Consumer Research Center, said in a statement.

Franco said consumers' worries about inflation, fueled by increasing prices at the gas pump, are now at an "all-time high" and are likely to rise further in the months ahead. She added that based on consumers' outlook on the economy, she believes there's little likelihood of a quick turnaround.

The Conference Board, the index that measures shoppers' current assessment of economic conditions, declined to 74.4 in May from 81.9 in April. The index that gauges their outlook over the next six months declined to 45.7 from 50.0 in April.

The downbeat news came as investors received mixed news about the housing market. A closely tracked Standard & Poor's/Case-Shiller index showed that housing prices dropped at the sharpest rate in two decades during the first quarter, indicating that the housing slump continues to deepen.

The S&P/Case-Shiller national home price index fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988. The quarterly index covers all nine U.S. Census divisions.

But the Commerce Department announced that sales of new homes rose in April for the first time in six months although the unexpected increase still left activity near the lowest level in 17 years.

Sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units, the agency said.

On Wall Street, the Dow Jones industrial average rose 48.04, or 0.38 percent, to 12,527.67 in morning trading.

Broader stock indicators were also higher. The Standard & Poor's 500 index rose 5.51, or 0.40 percent, to 1,381.44 and the Nasdaq composite index rose 22.42, or 0.92 percent, to 2,467.09.

[rgmiron]

arohanui,
We have a saying here in the USA, we have lots of saying. The saying is "Time to pay the piper".

And everybody..... is going to pay that piper, including you!

[cjs_cnet_xyz]

As people cut back on spending, where will they spend? Walmart. Where are 90% of Walmart''s products from? China. As we cut back on spending and try to save, more money flows out of the economy to overseas. So much for a quick recovery.

[arohanui-2009]

You Yanks make me laugh with all your whining and crying about current gas prices, Welcome to the real world where you now paying top dollar like the rest of us always have. Actually we still pay more than you but we don''''t drive gas guzzlers in the main unless we can afford it. Less flash but more cash in the long run. You guys never get it. Always moaning! Yes siree...one helluva wake up call in the offing for the good ole U S of A....Warren Buffet is talking a recession..then there are credit card debts in the stratosphere, foreclosures etc etc The rest of the world shakes its head in amazement that you are actually surprised by all this. A fitting end result of years of rampant consumerism.

[eggy1620]

Consumers have not reduced their spending at all. We are just spending our money differently. It mostly goes toward energy now instead of stuff to put in our houses.

[cattlekate]

It will be interesting to watch Michael Greenberger testify before Congress next week about the unregulated and opaque oil-futures trading going on in the dark corners of the commodities markets.

[fstop100]

G.W. and friends have really screwed things up.

[mcvet]

Many of our economic problems can be laid on the doorstep of Congress. Food prices have jumped significantly in the last couple of months due to the ethanol fiasco.

Oil prices have jumped because of an increase in international demand and the failure of Congress to allow for drilling of domestic oil in Gulf waters off Florida and other locations. We need new nuke plants and refineries - all curtailed by Congressional restrictions.

To use an overworked cliche, Congress is the problem, not the solution. No wonder polls show such national contempt for Congress.


--------------------------------------------------------------------------------

Posted by andylance1 at 06:52 AM : May 28, 2008
+ report abuse

ROFLMAO Yep makes perfect sense to a bootlicker I guess. We have a VICE PRESIDENT who developed an ENERGY Policy in SECRET WITH LEADERS of COMPANY''s that PRODUCE energy. SINCE that leader developed his SECRET Policy and since the Bush Administration decided to go to war against ALL Muslims, we have seen the nation as a whole slide into this sink hole and YOU want to blame CORN for all the problems? Yeah! Your one sharp tool Sparky!!! NOT!! Sieg Heil Bush

[andylance1]

Many of our economic problems can be laid on the doorstep of Congress. Food prices have jumped significantly in the last couple of months due to the ethanol fiasco.

Oil prices have jumped because of an increase in international demand and the failure of Congress to allow for drilling of domestic oil in Gulf waters off Florida and other locations. We need new nuke plants and refineries - all curtailed by Congressional restrictions.

To use an overworked cliche, Congress is the problem, not the solution. No wonder polls show such national contempt for Congress.

[hunterdon6]

The government wants the population poor and wanting such things as food, clothing, housing and energy sources. They will take away your guns so that you can''t defend yourself against criminals or rebel against the government that is trying to suppress you. The government wants you so deep in depth that no way you can get out. The government wants 100% control of the people. With high oil prices, high food prices, poor housing market, stock market tumbling, shipping all our jobs over seas, they are slowing gaining control over all of us. Third world countries already have this control, and soon it will be here. Its time to take back our country, and get politicians who will work for the people, and not just for themselves and big corporations. This fall, vote these corrupt politicians out of office!

[samrensho]

People should be VERY worried. Bushit and Co. have trashed the economy and racked up so much debt via bond sales that it will be generations before it is paid off. You folks ain''t seen nothin'' yet. The GOP will play some games just before the election to generate a smoke screen but the truth is the US is in very deep do do because of the Republicans.

[shanev137]

The ultra-rich don''t care about America.

They''re all securely invested in Euros and the commodities markets right now (oil, gold, foods, meats) and they''re actually hoping the dollar drops further and inflation happens because they''ll get richer. LOL

The highlight of their day is sipping expensive brandy after a lobster dinner and gloating about how well they''ve done in oil futures and how many poor people are suffering because of it.

[marcosis78]

Everytime Bush talks about how we should get away from foreign oil, he always smiles. Is it because the government is doing next to nothing to help us? Or is it because he knows he has all of America in a hand lock and a choke hold knowing that we MUST pay it? Either way, he isn''t/won''t do anything about it because he has a LOT of $$$ in oil so the more it goes up, the more $$$ he is making. In other words, he is selling out America and destroying it so he can make billions more for himself. He''s already worth billions and he pays in a couple hundred thousand in taxes, so I fail to see the logic in anyone saying he is doing a swell job.

[nonayabiness]

Sorry for the multiple posts below. Publish button got stuck.

[nonayabiness]

Hey, know what???

I heard the other day on the radio "Blue Collar Man" by Styx. Though I have the album (CD) and such, hadn''t heard it for a while.

It used to be the ''Blue Collar Man'' had a job and a dream, working hard for a better life. Now, the Blue Collar Man is impoverished, and unless you''re a corporate ''fluff'' the White Collar Man is working hard for a better life and happiness that is all to distant, too.

Everyone should request this song on all their stations every day. Perhaps someone with a conscience at all will hear it and understand the plight of the worker. Maybe??

[nonayabiness]

Hey, know what???

I heard the other day on the radio "Blue Collar Man" by Styx. Though I have the album (CD) and such, hadn''t heard it for a while.

It used to be the ''Blue Collar Man'' had a job and a dream, working hard for a better life. Now, the Blue Collar Man is impoverished, and unless you''re a corporate ''fluff'' the White Collar Man is working hard for a better life and happiness that is all to distant, too.

Everyone should request this song on all their stations every day. Perhaps someone with a conscience at all will hear it and understand the plight of the worker. Maybe??

[nonayabiness]

Hey, know what???

I heard the other day on the radio "Blue Collar Man" by Styx. Though I have the album (CD) and such, hadn''t heard it for a while.

It used to be the ''Blue Collar Man'' had a job and a dream, working hard for a better life. Now, the Blue Collar Man is impoverished, and unless you''re a corporate ''fluff'' the White Collar Man is working hard for a better life and happiness that is all to distant, too.

Everyone should request this song on all their stations every day. Perhaps someone with a conscience at all will hear it and understand the plight of the worker. Maybe??

[nonayabiness]

forthepeopl1 -

Why are you asking that only people who took out mortgages from 2000-2007 get to pay them off at 40% of value? How about any one who''s having financial difficulty? If you are going to give people who overbought and failed to read the terms of their mortgage agreements (or have a professional do so) up to a 60% free write-off, what about the rest of us? Only seems fair.

So, I like your idea, in a way, however, I want some of that incentive too. So let my bank refinance me at a rate of 2.5% for 40% of what I owe. I''d take that deal in a heartbeat!!!! Thanks for the suggestion, but don''t forget to include the rest of your fellow Americans.

[mcv57]

Posted by j-whitman

You sound like you work for the White House?

[mcv57]

BUY PRECIOUS METAL - U.S. CURRENCY IS JUST VALUELESS GOVERNMENT DEBT PAPER NOTES. BUFFET AND SOROS HAS WARNED THE WORLD!

Even the Billionaires are getting worried about their fortune. Wall Streets elites are having a hay-day on government welfare funds, just to host a fictitous economy. The present banking system will mostly likely collapse when th Bushwacker leaves office - he leaves the country. The mastermind Republician regime will most likely suffer his fate - death.

This article relays reality, a far cry from the rhertoric from the liar G. W. Bush. This Xmas will be nothing more than a worsting condition - lay-offs, mergers, and bankrupcy. The Bushwacker credit has run-out (I guess The Book of Revelation is right - man will work a complete day just to provide one meal). The United Nation Troops are raping six year old girls for food and money. God come and delivery us!

[cjs_cnet_xyz]

Why is the Fed loaning taxpayer money to banks (e.g. credit industry) at 2% and allowing it to retain usury credit terms (e.g. limits of 29%, high late fees, universal default)? This is the biggest government/industry collusion of theft in America today. Consumer confidence will stay down until these credit card companies are reigned in. The credit industry is acting in a manner designed to force citizens of this country into bankruptcy. I do not approve. It is a form of treason because it undermines public faith in the nation.