U.S. consumer confidence lowest since Nov 2011

Americans are feeling worse about the economy than they have in a long time.

Despite an improving U.S. job and housing markets, consumer confidence fell to the lowest level it’s been since November 2011. The results are the latest swing in the index, which has been on a rollercoaster.

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This year, the index declined in January, rose in February and then posted four months of declines before registering an increase in July. August’s reading indicates that the gains in the job and housing markets aren’t big enough to put to rest Americans’ economic fears, which could have an impact on how they vote in November’s presidential election.

“Several elements of this underperformance are worrisome,” says Francis Généreux, senior economist at Desjardins. “The index was expected to be sapped by the recent climb in gas prices, but it seems households are largely concerned about the job market.

“The proportion of respondents who expect fewer jobs in the next six months is at its highest level since fall 2011.”

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Home prices rose in June from the same month last year, the first year-over-year increase since the summer of 2010, according to The Standard & Poor’s/Case-Shiller home price index that was released Tuesday. Additionally, all 20 cities tracked by the index rose in June from May, the second consecutive time in which every city posted month-over-month gains.

“The weak consumer confidence is disappointing, and consumption growth will continue to be slow over the coming months,” says Généreux. “However, improved home prices is an encouraging sign that could eventually help households.”

The job market also is slowly on the mend. Employers added 163,000 jobs in July, the most since February. Job gains averaged 73,000 jobs a month from April through June. But that’s not enough to keep up with a rising population, and the unemployment rate increased to 8.3% from 8.2% in June.

Most economists say stronger growth is needed to produce enough jobs to lower unemployment — and make Americans feel better. The economy grew at an annual rate of 1.5% from April through June, down from 2% in the first quarter and 4.1% in the fourth quarter of 2011.

“Consumers were more apprehensive about business and employment prospects,” said Lynn Franco, director of Economic Indicators at The Conference Board in a statement.

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The consumer confidence index, which is based on a survey conducted Aug. 1 to Aug. 16 with about 500 randomly selected people nationwide, underscored that anxiety. The index is widely watched because consumer spending accounts for 70% of U.S. economic activity. It has remained well below the 90 reading that indicates a healthy economy — a level it hasn’t touched since the recession began in December 2007.

In the latest reading, the percentage of consumers expecting business conditions to improve over the next six months declined to 16.5% from 19. Those expecting more jobs in the months ahead declined to 15.4% from 17.6%, while those expecting fewer jobs rose to 23.4% from 20.6%.

In addition to worries about jobs and business conditions, Americans’ outlook may also be influenced by gas prices. They fell sharply from a peak of $3.94 in early April, but have started to surge again in recent weeks. In fact, gas prices at the pump rose 19 cents to $3.71 during the period that captures the survey. That could put more financial pressure on low- and middle-income shoppers.

Despite their economic worries, Americans appear to be optimistic about their future earnings potential. According to the index, the proportion of consumers expecting an increase in their incomes improved to 15.7% from 14.2%.