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WRAPUP 3-U.S. consumer confidence dims, home prices climb
July 27, 2010 / 5:26 PM / in 7 years

WRAPUP 3-U.S. consumer confidence dims, home prices climb

 * Unemployment, wage worries erode US consumer confidence
 * Home prices gains to stall with unemployment near 10 pct
 * "Dark cloud over consumers" won't lift without new jobs
 (Recasts, adds details on consumer, job data)
 By Lynn Adler
 NEW YORK, July 27 (Reuters) - Job worries drove July U.S.
consumer confidence to its lowest since February, with one in
six people expecting lower income in the next six months,
underscoring the precarious state of economic recovery.
 Home prices rose in May but display no signs of a sustained
rebound as long as unemployment flirts with 10 percent and a
record stockpile of foreclosed houses looms over the market, a
separate report showed on Tuesday.
 Single-family house prices remain 29.1 percent below peaks
four years ago, according to a Standard & Poor's/Case-Shiller
 The deepest housing crash since the Great Depression
dragged the U.S. economy into recession, and is doing little to
stimulate broader growth as many economists fret about a
possible double-dip recession.
 The Conference Board, a New York-based business and
economics research group, reported that consumer attitudes
worsened this month as did expectations about jobs being hard
to get. For more see [ID:nN27219358] [ID:nNLLRIE6A9].
 "Concerns about business conditions and the labor market
are casting a dark cloud over consumers that is not likely to
lift until the job market improves," said Lynn Franco, Director
of The Conference Board Consumer Research Center.
 The group's index of consumer attitudes fell to 50.4 in
July from an upwardly revised 54.3 in June, below the median
forecast of 51 in a Reuters poll.
 The "jobs hard to get" reading, meanwhile, rose to 45.8
percent from 43.5 percent.
 The tepid consumer data tempered stock market gains. U.S.
Treasuries fell in the face of new supply.
 "There have been quite a few headwinds -- the fiscal
stimulus is fading, the European situation certainly did have
an impact on consumer confidence and inventories are being
brought more into line," said David Sloan, economist at 4Cast
Ltd in New York. "But clearly the big problem for consumers is
 U.S. unemployment stood at 9.5 percent in June, the lowest
in nearly a year, but reflected people leaving the workforce
rather than a trend toward greater hiring.  
 New jobless benefits claims, to be reported by the Labor
Department on Thursday, are seen are seen dipping to 459,000 in
the week ended July 24 from a surprisingly high 464,000 the
prior week
 "Without consumers on board, the economic recovery is
looking dangerously vulnerable," Paul Dales, U.S. economist at
Capital Economics in Toronto, wrote in a report. "Falling
consumer confidence and the growing likelihood of a double-dip
in house prices have put a further dent in the already
deteriorating outlook for consumption growth."
 Consumer sentiment fell to a nearly one-year low in July on
renewed fears about economic stability, according to the
Thomson Reuters/University of Michigan's Surveys of Consumers
earlier this month. The final data will be reported on Friday.[nN16126985]
 U.S. single-family home prices rose more than expected in
May, but still reflected robust spring sales spurred by
now-expired homebuyer tax credits, the S&P/Case-Shiller home
price indexes showed. [ID:nNLLRIE6A8]
 May is a strong seasonal period for home sales, and buyers
who rushed to sign contracts by the April 30 deadline for up to
$8,000 in tax credits have until Sept. 30 to close loans.
 Seven of the 20 largest metro areas still reported lower
prices than a year ago and most economists predict further
single-digit declines before any sustained upturn. A record
inventory of foreclosed properties further threatens prices.
 "For me, a double-dip is another recession before we've
healed from this recession ... The probability of that kind of
double-dip is more than 50 percent," Robert Shiller, professor
of economics at Yale University and co-developer of the price
index told Reuters Insider. [ID:nN27264398]
 The 20-city composite price index in May rose 0.5 percent,
seasonally adjusted, after an upwardly revised 0.6 percent
April gain, topping the 0.2 percent rise seen in a Reuters
poll. The index was 4.6 percent above last May, S&P said.
 Prices jumped 1.3 percent on an unadjusted basis after a
0.9 percent April gain and falls in the six prior months.
 For a graphic on S&P/Case-Shiller home price indexes see:
 For Reuters Insider interview with Yale's Shiller click:
 For Reuters Insider show "Double dip not likely, economists
 say, but worrisome" see:
 For poll on most important problems facing U.S. today                        
 "While May's report on its own looks somewhat positive, a
broader look at home price levels over the past year still does
not indicate that the housing market is in any form of
sustained recovery," David M. Blitzer, chairman of the Index
Committee at Standard & Poor's, said in a statement.
 Sales of new homes in June, reported on Monday, surged 23.6
percent but remained at the second-lowest level since the
Commerce Department started keeping records in 1963.
 The government is expected to report on Friday that gross
domestic product growth slowed to a 2.5 percent annual rate in
the second quarter from a 2.7 percent pace in the first.
 (Additional reporting by John Parry, Chris Reese, Jennifer
Rogers and Julie Haviv; Editing by Andrew Hay)

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