Home prices dropping in largest U.S. cities; further declines expected in 2011
From MSNBC:
U.S. consumer confidence unexpectedly deteriorated in December, while prices of U.S. single-family homes fell almost double the expected pace in October, tempering growing optimism on the economy's recovery.
The latest data was at odds with other signs suggesting the economic recovery is accelerating and a separate report last week showing consumer sentiment at its highest level since June this month.
The Conference Board, an industry group, said its index of consumer attitudes slipped to 52.5 in December from an upwardly revised 54.3 in November.
The median of forecasts from analysts polled by Reuters was for a reading of 56.0.
Consumers' labor market assessment worsened. The "jobs hard to get" index rose to 46.8 percent in December from 46.3 percent last month, while the "jobs plentiful" index dropped to 3.9 percent from 4.3 percent.
"U.S. consumers are still worried about high unemployment, housing market stagnation and the generally meager growth they've seen so far," said Kathy Lien, director of currency research at GFT in New York.
Financial markets showed a muted reaction to the consumer and housing data, with traders citing very thin post-Christmas trade.
Separate data Tuesday showed the Standard & Poor's/Case-Shiller composite index of 20 metropolitan areas declined 1 percent in October from September on a seasonally adjusted basis.
It was the fourth straight monthly decline and steeper than the 0.6 percent decrease economists expected. The fall pushed the index 0.8 percent below its year-earlier level, the first year-on-year drop since January.
Some economists cautioned against reading too much into one month's figures and said the surprising drop in consumer confidence doesn't signal a meaningful shift in the outlook for spending.
Optimism about the outlook for the economy has grown in recent weeks after reports on jobless claims, durable goods and consumer spending suggested the economy perked up a bit in the fourth quarter and appears to be entering the new year with a relatively decent amount of momentum.
Economists also expect a tax cut deal recently signed into law by President Barack Obama to lift growth next year by as much as 1 percentage point. The economy is also getting monetary support from the Federal Reserve's planned purchases of $600 billion in government debt.
Despite the consumer confidence data, U.S. retail sales rose in the week before Christmas as shoppers hurried to finish their gift-buying, putting holiday sales on track to hit the high end of estimates.
Data released Tuesday by the International Council of Shopping Centers and Goldman Sachs showed retail sales rose 4.8 percent for the week ended Dec. 25 compared to the year-earlier period, helped in part by shoppers who could shop all day on Christmas Eve, which was a day off for many given that Christmas fell on a Saturday this year.