Consumer confidence falls to 5-year low

By Burton Frierson

NEW YORK (Reuters) - Confidence among U.S. consumers fell to a five-year low in April as they confronted the grimmest jobs outlook since late 2004 and they expect inflation to rival the levels last seen in the early 1980s, the Conference Board said on Tuesday.

The private Conference Board's index of consumer sentiment fell to 62.3 in April, the lowest since March 2003, when the Iraq war was launched, from an upwardly revised 65.9 in March.

Economists had expected the index to fall more sharply to 62.0, according to a median forecast in a poll by Reuters. On Wall Street, stocks turned lower in the wake of the data while the dollar was little changed.

Government bonds, which usually benefit from signs of economic weakness, held onto the day's earlier gains.

"This does not really change our view that consumers are continuing to experience the strain of higher oil and food prices," said Mark Meadows, currency strategist at Tempus Consulting in Washington.

The monthly survey's gauge of inflation expectations surged to 6.8 percent from 6.1 percent in March, which is likely to support expectations that the Federal Reserve will soon wind down its aggressive campaign of interest rate cuts.

This month marked the highest reading on inflation expectations since a matching 6.8 percent in September 2005, the aftermath of Hurricane Katrina, which briefly sent energy prices soaring.

Food and energy prices in recent months have remained stubbornly higher amid a global boom in commodities and a weak U.S. dollar. The last time the government's consumer inflation gauge reached 6.8 percent was 1982.

Reflecting worries about the labor market, the gauge of respondents' feelings that jobs are plentiful slid to 16.6 in April, the lowest since September 2004, from 19.2 in March.

A measure of the view that jobs are hard to get rose to 27.9 -- the highest since November 2004 -- from 24.5.

The index of consumers' assessment of their present situation fell to 80.7, the lowest since December 2003, from 90.6.

The release by the Conference Board, a private business and research organization, follows Friday's Reuters/University of Michigan gauge of consumer sentiment, which hit its weakest in 26 years on heightened worries over jobs, inflation and the moribund housing market.

Earlier on Tuesday, data showed prices of existing U.S. single-family homes extended their slump in February, with 17 of 20 measured regions posting record annual falls, according to the Standard & Poor's/Case Shiller home price index.

(Reporting by Burton Frierson; Editing by Tom Hals)