Consumers Are In Gloomiest Mood in Two Years
U.S. consumer sentiment soured for a third month in December as a housing recession and
expensive gasoline left consumers at their gloomiest since the aftermath of Hurricane Katrina, a report showed Friday.
The Reuters/University of Michigan index of confidence fell to 74.5 so far this month, slightly below analysts' median forecast for a slip to 75.0 and down from 76.1 in November.
Excluding a post-Katrina reading in October 2005, this was the worst reading in 15 years.
The U.S. economy has been plagued by a housing crisis that has spread to mortgage-linked financial assets and crippled the credit system, threatening growth.
Reuters/UMich found perceptions of current conditions improved modestly, but expectations about the future deteriorated to their lowest since 1992.
The survey's index of current economic conditions edged up to 92.1 in early December from 91.5 in November while its reading of consumer expectations slipped to 63.2 from 66.2.
The survey also revealed a widening divide in sentiment between rich and poor. "Additional losses among lower-income households more than offset the gains among upper-income
households," said Richard Curtin, who leads the organization's business survey committee.
"The data document a widening gap across income groups from what was already an all-time record," he said.
In one ray of hope for the troubled housing sector, depressed prices appeared to be attracting some interest, with home buying intentions rising for the first time in six months.
Still, the report said this would not likely translate into a rebound any time soon.
"Consumers will remain on the sidelines until any additional price declines are seen as unlikely," the survey found.
But not all costs were expected to go down. Consumers believe things like food and gasoline will remain a challenge to the pocketbook. Inflation expectations one year out rose to
3.5 percent from 3.4 percent.