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Economy in Brief

Consumer Confidence Tanked as Gasoline Prices Rose & Home Prices Fell
by Tom Moeller October 30, 2007

Consumer confidence fell in October according to the Conference Board Survey. The 3.9% m/m decline was preceded by declines of 5.8% and 5.6% during the prior two months.

The decline in the index to 95.6, in fact, was to the lowest level since October 2005. Economists generally had expected a lesser decline to 99.0.

The present conditions fell 2.0% after declines of 6.8% and 5.9% during the prior two months. The decline also was to the lowest level in about two years.

The percentage of respondents who viewed business conditions as good dropped sharply for the third consecutive month while the percentage who viewed jobs as plentiful also fell hard for the third month. Those who felt jobs were hard to get rose to the highest since late 2005.

The expectations index similarly fell sharply by 5.8% m/m to the lowest in two years. Expectations about business conditions and income both fell but expectations about employment rose slightly.

Plans to buy major appliances fell most sharply to the lowest in two years while plans to buy carpet held steady at a low level. The percentage of respondents who would buy a new car fell to the lowest since July.

The expected inflation rate in twelve months remained at 5.1%, equal to expectations during all of last year for inflation in twelve months.

U.S. home prices fell 0.8% m/m in August for the 14th consecutive month, according to the S&P/Case-Shiller home price index composite 10.

The index of just 10 U.S. cities and their surrounding areas is not adjusted for the quality or the size of the home. It fell five percent in August from a year ago.

Conference Board
 (SA, 1985=100)
October September Y/Y 2006 2005 2004
Consumer Confidence Index 95.6 99.5 -9.0% 105.9 100.3 96.1
Present Conditions 118.8 121.2 -5.0% 130.2 116.1 94.9
Expectations 80.1 85.0 -12.8% 89.7 89.7 96.9
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