US remains downbeat on economy

City A.M. Reporter
US CONSUMER confidence fell to its lowest level since February in September, underscoring lingering worries about the strength of the economic recovery, while home prices dipped in July.

The Conference Board’s index of consumer attitudes fell to 48.5 in September from a revised 53.2 in August, hit by a weak labour market and business conditions. This was the lowest level in seven months.

The report also showed inflation expectations eased with one year inflation expectations downto 4.9 per cent from 5 per cent the previous month. “With unemployment at a 26-year high and confidence among consumers remaining weak, this decline in sentiment will give the Fed a stronger reason to increase stimulus in November,” said Kathy Lien, director of currency research at GFT in New York.

Meanwhile, the S&P/Case Shiller composite index of 20 metropolitan areas, also published yesterday, declined 0.1 per cent in July from June on a seasonally adjusted basis.

The dip followed a 0.2 per cent June rise, which was revised down from a 0.3 per cent increase. Prices remain 27.9 per cent below the peak set in mid-2006 but are still some seven per cent above the trough that was hit in April 2009. The data is the latest in a slew of poor US housing market figures and point to further falls.

ING’s Teunis Brosens said: “Home sales collapsed in July following the expiry of the homebuyer tax credit. While demand evaporated, supply barely budged. In this environment, price declines are all but inevitable. With demand low and a still substantial supply overhang, further price slippage is highly likely in the coming months.”