|
CNBC'S MOST SHARED
- 'We're in the Middle of a Crash': Black Swan
- SEC May Reinstate Rules for Short-Selling Stocks
- The Rising Mountain of Debt May Be the Next Crisis
- Latvian Banker Taking Souls as Collateral
- A Goldman Trading Scandal?
- Alaska Governor Sarah Palin Will Resign
- Cuddle Parties Heat Up
- The Worst Expected 2010 State Budget Gaps
- NY City Apartment Sales Down More Than 50%
- A Goldman Trading Scandal?
- Top Videos: From the Black Swan to the Bond King

- Obama Plan Would Trim Back Financial Powerhouses
- Biden: 'We Misread How Bad The Economy Was'
- FedEx Sees Signs of a Turnaround: Report
- Property Tax Appeals Take Toll on Governments
- Chrysler Names Remaining Directors to New Board
- Car Dealer Determined To Fight Chrysler Over Franchise
- 'Ice Age' Heats Up Worldwide Box Office
- Fireworks At Pharma's Market
- Value of Warren Buffett's Annual Gift to Gates Foundation Falls Along With Berkshire's Stock
- Michael Jackson: The Music And The Money
- Five Stock Picks for This Market
- Realities of the New Obama Refis
- Weak Dollar Means Gold at $1,040: Strategist
- Court Ruling Could Mean Trouble for TiVo
- Lance, Please Back Out Of Tour
- TeleMedicine Gets An Apple App Store Facelift
U.S. consumer sentiment slid to a 16-year low in June while house prices suffered record annual drops in April, according to data on Tuesday that suggested a retrenchment in spending that will keep squelching economic growth.
![]() |
The index has now dropped by more than half since 111.90 last July, before the housing market troubles triggered the most severe credit crisis in at least a decade.
"To put it in perspective, that's a bigger decline than what we saw after the September 11 attack and Hurricane Katrina," said Dana Saporta, economist at Dresdner Kleinwort Securities.
"It sends out the signal that the consumers are not about to ramp up their spending," he said.
"We worry about the contraction in the economy once the tax rebates dissipate." In addition, the survey showed an index measuring consumer expectations for the future sank to a record low as inflation forecasts matched an all-time high this month.
The inflation threat has been highlighted in the past 24 hours by massive price increases announced by some of the world's largest basic materials conglomerates.
First, mining titan Rio Tinto secured an agreement with China's largest steel maker to nearly double the price Rio gets for iron ore, and rival producer BHP Billiton is expected to follow through with similar price hikes.
Then early on Tuesday, Dow Chemical said it would raise prices up to 25 percent, just weeks after the largest U.S. chemicals maker implemented a 20 percent across-the-board price increase .
U.S. home prices in April, meantime, extended their record annual slump in April although the pace of decline subsided a bit in the month, according to Standard & Poor's/Case-Shiller data.
S&P's 20-city index for April posted a smaller-than-expected 1.4 percent drop from March, but it also slumped by a record 15.3 percent annually and by 17.8 percent since hitting its peak in July 2006.
By another measure, the Office of Federal Housing Enterprise Oversight, which gauges prices based on relatively low risk loans purchased by Fannie Mae [FNM
Loading...
()
] and Freddie Mac [FRE
Loading...
()
], said its home price index fell 0.8 percent in April from March for a 4.6 percent annual downturn.
Both housing reports suggest consumers will be less in the mood to ramp up spending any time soon.
However, U.S. Treasury Secretary Henry Paulson said on Tuesday he thought that most of the slump in U.S. housing prices would be over by year end and that growth should be stronger by then.
In an interview on Mexican television, Paulson said the global economy was being strained by costly energy but said U.S. economic fundamentals were sound.
"I feel moderately optimistic that at the end of the year we will have signs of an economic recovery," Paulson said. "Hopefully the biggest part of the housing decline will be over by the end of the year."










