Also From Reuters
Consumer confidence fell to a five-year low this month as Americans confronted the grimmest jobs outlook since late 2004, while data also showed a record drop in home prices in February.Contributing to their slumping confidence in April, consumers expected that inflation would accelerate to a pace last seen in the early 1980s. The news cemented the prevailing view that the Federal Reserve, which is to open a two-day policy meeting later on Tuesday, would signal an end to its aggressive campaign of lowering interest rates.
The private Conference Board’s index of consumer sentiment fell to 62.3 in April, the lowest reading since March 2003, when the Iraq war was launched, from an upwardly revised 65.9 in March.
The monthly survey’s gauge of inflation expectations surged to 6.8 percent from 6.1 percent in March. It was the highest reading on inflation expectations since a matching 6.8 percent in September 2005.
“Consumers haven’t been this depressed in a long time,” said Chris Rupkey, senior financial economist with Bank of Tokyo-Mitsubishi in New York.
“They are saying that jobs are much harder to get since the start of the year and that does not bode well for this Friday’s employment data. This is exactly what you see when we are in a recession and the labor market indicates that we are indeed in a recession, and the million dollar question is whether this decline in confidence leads them to pull back their spending.”
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