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Saturday 03rd of October 2009
September 29, 2009    

US consumers not as hopeful as policymakers as confidence dips

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by Kay Murchie
US consumers not as hopeful as policymakers as confidence dips

Despite positive comments from Federal Reserve chairman Ben Bernanke that the US recession is very likely over and President Barack Obama saying the economy is improving, it seems US consumers are not sharing their optimism after confidence fell unexpectedly in September.

The closely-monitored Consumer Confidence Index from the Conference Board fell from a revised 54.5 in August to 53.1 in September - much lower than the reading of 57.0 expected on Wall Street.

The latest figures suggest that consumers may be cautious in resuming spending. This is worrying since personal spending makes up for more than two-thirds of US economic activity - and is key to an economic recovery.

Commenting on the figures, Conference Board research director Lynn Franco said: “Consumers viewed both current business conditions and the labour market less favourably than last month.

“While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. With the holiday season quickly approaching, this is not very encouraging news,” added Ms Franco.

In the meantime, the index also found that fears are growing about the job market. Those claiming jobs are “hard to get” grew from 44.3% to 47%.

However, a separate leading US index has revealed a better-than-expected rise in house prices in July.

The S&P/Case-Shiller composite index of 20 metropolitan areas rose by 1.6% compared with June. However, prices are still 13.3% below July 2008 levels.

All 20 metropolitan areas saw an improvement in the annual rate of fall during July compared with the June. On a monthly basis, only Seattle and Las Vegas experienced declines.

Average property prices across the US are now at autumn 2003 levels.

David Sloan, economist at 4Cast, comments: “We were pretty surprised that prices are moving ahead so rapidly. The housing market does seem to have found a base and prices seem to be in recovery, which is quite significant.”

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