US consumers lose confidence as economic fears weigh
Consumer confidence falls in February amidst concerns about the US economy’s direction but house prices continue to rise, with data showing prices in 20 US cities are on the advance
Home Depot Inc reported a higher-than-expected quarterly profit today as it kept a tight lid on costs to offset weak sales, sending shares in the world’s largest home improvement chain up 3 per cent. Photograph: Mario Anzuoni/Reuters
Consumer confidence fell more than forecast in February as growing concern about the US economy’s direction outweighed improving perceptions of its current state. The Conference Board’s index decreased to 78.1 from a revised 79.4 in January that was weaker than initially estimated, the New York-based private research group reported today.
Another report showed home prices were increasing at a slower pace. Fewer Americans projected business conditions would improve over the next six months, fueling anxiety over the outlook for jobs and incomes that risks restraining consumer spending.
The world’s largest economy will need to see a pickup in household purchases to emerge from what’s shaping up to be a first-quarter slowdown as harsh winter weather holds back housing, manufacturing and hiring.
“The consumer feels that the economy has gotten better, but is not necessarily confident that it’ll continue to exhibit momentum going forward,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “The most important thing that would get consumers feeling better about the outlook is if the labor market improves more substantially.”
Stocks rose, sending the Standard and Poor’s 500 Index above its record close, after companies from Macy’s to Home Depotreported higher-than-estimated earnings. The SandP 500 index climbed 0.1 per cent to 1,848.74 at 12:36 p.m. in New York. The index averaged 53.7 in the recession that ended in June 2009.
A report from SandP/Case-Shiller showed home values in 20 cities climbed 13.4 per cent in December from the same month in 2012 after a 13.7 per cent increase in the year ended in November. It marked the first deceleration in year-to-year gains since June. Price appreciation is slowing as rising mortgage rates combined with harsh winter weather have cooled home purchases over the past few months. Smaller increases mean more homes will remain affordable as the labor market improves, helping maintain the rebound in residential real estate that has boosted growth.
“The housing recovery continues, but perhaps not as vigorously as it did in the first half of last year,” said Michael Feroli, chief US economist at JPMorgan Chase. “Even so, appreciation trends still look pretty good even though they may not be as strong as they were.”