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May 26, 2009    

US consumer confidence up but house prices continue to fall

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by Kay Murchie
”US

There is some good news for the world’s largest economy today after a survey revealed that US consumer confidence has risen to its highest level since September 2008 (at the time of the collapse of Lehman Brothers).

The Conference Board’s Consumer Confidence Index rose from 40.8 in April up to 54.9 in May - far exceeding the average 42.3 predicted by economists.

The index is closely monitored since consumer spending accounts for over two-thirds of US economic activity.

The news lifted the Dow Jones by over 2% to 8440 by lunchtime in New York, while the S&P 500 rose 2% and the Nasdaq gained 3%.

Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement: “While confidence is still weak by historic standards, as far as consumers are concerned, the worst is now behind us.”

However, there was some bad news for the US today after the Standard & Poor’s/Case-Shiller National Home Price index revealed that house prices fell by 19.1% nationally in the first three months of 2009, compared with the same period last year.

Since reaching a high during the second quarter of 2006, house prices have fallen 32.2%.

However, while house prices fell at the fastest annual rate on record in the first quarter, the pace of month-to-month declines continued to slow.

According to David M Blitzer, chairman of the S&P’s index committee, there is no evidence that a recovery in house prices has begun.

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