Confidence tumbles to 5-year low

The sign says it all at a Florida restaurant. Consumer confidence and outlook have fallen. (Tony Dejak/Associated Press)

WASHINGTON - US consumer confidence fell more than forecast in March as Americans' outlook for the economy dropped to the lowest level since Richard Nixon was president.

The Conference Board's confidence index fell to 64.5, a five-year low, from a revised 76.4 in February, the New York research group said yesterday. A report from S&P/Case-Shiller showed home prices in January fell by the most on record.

Declining stock and property values have unnerved Americans, heightening concern spending will falter. A drop in spending, which accounts for more than two-thirds of the economy, would deepen what economists say is almost certainly the second recession of the decade.

"Consumers are going to pull back pretty sharply," said Carl Riccadonna, an economist at Deutsche Bank Securities Inc. in New York. "The labor market is starting to deteriorate and income growth is barely keeping pace with inflation. These are all pretty negative omens for what's to come."

The board's gauge of expectations for the next six months slumped to 47.9, the lowest since December 1973, when the Watergate scandal rocked the Nixon administration and an embargo by a group of Arab oil exporters was in effect, the report showed.

Spending is already taking a hit. Retail sales fell 0.6 percent in February, according to figures from the Commerce Department, the second decline in three months.

Consumer spending may grow at an annual rate of 0.5 percent this quarter, the slowest pace since the 1991 recession, according to the median estimate of economists surveyed this month by Bloomberg News.

Economists forecast the board's measure would fall to 73.5 from a previously reported 75, according to the median of 61 forecasts in a Bloomberg News survey.

Home prices in 20 US metropolitan areas fell in January by the most on record, a sign the housing recession is deepening, a private survey also showed yesterday. The S&P/Case-Shiller home price index dropped 10.7 percent from January 2007, after a 9 percent decrease in December. The gauge has fallen for 13 consecutive months.

The Conference Board's measure of consumers' outlook on the current situation declined to 89.2 in March from 104 the prior month.

The share of consumers who said jobs are plentiful dropped to 18.8 percent from 21.5 percent last month. Those saying jobs are hard to get rose to 25.1 percent from 23.4 percent.

The proportion of people who expect their incomes to rise over the next six months fell to 14.9 percent, the lowest since record keeping began in 1967, from 18 percent.

• Searched
• E-Mailed