US consumer confidence skids
25 Feb 2009
The New York-based Conference Board reports its consumer confidence index dropped by nearly one-third this month to an all-time low, down sharply by 12 points from last month's revised tally of 37.
This is an all-time low since the index was created more than four decades ago. A year ago, the index stood above 75.
Consumer spending accounts for more than half of US economic output. Fiercely negative consumer sentiment makes a rebound in spending far less likely, thereby adding to the challenges facing policymakers as they try to foster an economic recovery.
"People are going to have to save again, and in a way that is good, because we will return over the next few years to a higher rate of savings, less foreign borrowing, lower current account deficits, and that is a desirable place to go," said Ben Bernanke.
"The transition, though, is very difficult. The decline in consumer spending has contributed to this great weakness in the economy. And we have a situation where, instead of saving more, we are just getting a deeper and deeper recession," he said.
Meanwhile, the Federal Housing Finance Agency's House Price Index showed American homes losing an average 3.4 per cent of their market value in the fourth quarter, worse even than the third quarter's record-setting 2 per cent drop.
The fourth-quarter losses were the worst in the 18-year history of the government's price survey. In all of 2008, prices fell 8.2 per cent; 9.6 per cent when adjusted for inflation.
