By Pedro Nicolaci da CostaPosted 2009/10/27 at 12:46 pm EDT
NEW YORK, Oct. 27, 2009 (Reuters) — U.S. consumer confidence deteriorated sharply in October as the worst job market in a quarter century heightened concerns about the future, more than outweighing modest improvements in the housing sector.
Despite the stability in house prices, which saw a fourth month of gains in August, a report from The Conference Board suggested Americans are far from upbeat.
The industry group's confidence index dived to 47.7 this month from 53.4 in September, the biggest drop in eight months. The report was unequivocally weak, with the expectations index plunging to 65.7 from 73.7.
Persistent trouble in the labor market was a major culprit. The proportion of respondents saying jobs were hard to get rose to 49.6 from 47.0 percent.
"Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role," said Lynn Franco, director of The Conference Board Consumer Center Research.
The current conditions indicator fell to 20.7, and is near its lowest level in 26 years. This mirrored the labor market, where the current jobless rate of 9.8 percent is the highest since 1983.
At least home prices, battered by a severe recession in housing, appeared to be finding a footing. The Standard & Poor's Case/Shiller report on house prices showed its index of prices in 20 cities rose 1.2 percent, outpacing median forecasts of economists polled by Reuters.
The rise helped moderate the year-on-year price decline, slowing it to 11.3 percent.
"It does suggest there is some recovery going on," said David Sloan, economist at 4Cast Ltd. "It is possible the market is getting some temporary support from the temporary tax credit which may not last longer."
The U.S. Senate could vote on Tuesday to extend a popular $8,000 tax break for home buyers that has helped the housing market recover some ground from its worst slump in modern history.
(Additional reporting by Julie Haviv, Editing by Chizu Nomiyama)
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