NEW YORK (Reuters) - U.S. consumer confidence sagged to a 10-month low this month on worries about jobs and fears gridlock in Washington could hinder efforts to restart employment, curbing the economic recovery.
The housing market also remains rickety, data showed on Tuesday, further underscoring the economy’s fragility.
Confidence fell in February as consumers’ short-term outlook on jobs worsened, according to a report from an industry group, stoking analysts’ concerns that spending could falter and curb economic activity.
“There is growing disenchantment with the way (Congress) has been handling the problems. Not only the growing deficit, but their inability to get the job engine started,” said Carmine Grigoli, chief U.S. investment strategist at the equities division of Mizuho Securities USA in New York.
The Conference Board said its index of consumer attitudes fell to 46.0 in February, the lowest since April last year and down from a revised 56.5 in January. The reading was also striking for how much it undershot the 55.0 median forecast from analysts polled by Reuters.
“This is just a flat-out bad report,” said Tom Porcelli, senior economist at RBC Capital Markets in New York.
“I think if you’re looking for signals for consumer spending or jobs, there are no positive signals here,” Porcelli added. “In fairness we’re going through a pretty tough recovery and we know that, but I think this is a reminder that the recovery’s going to be very uneven.”
U.S. stocks suffered their biggest one-day decline in nearly three weeks on Tuesday after a sharp drop in consumer confidence. Treasury prices shot higher, while the dollar rose against the euro.
Consumers’ assessment of the labor market worsened. The Conference Board’s “jobs hard to get” index rose to 47.7 percent in February from 46.5 percent in January. The present situation index dropped to 19.4 from 25.2 in January, the worst since February 1983.
The number of mass layoffs by U.S. employers edged up in January as manufacturers stepped up job cuts, another report showed, even though many analysts still think the economy is on the verge of creating jobs.
Emergency government support for the economy has helped limit the already severe damage to the labor market, a non-partisan organization said. The Congressional Budget Office said the massive stimulus package passed last year created up to 2.1 million jobs in the last three months of 2009.
U.S. congressional leaders said on Tuesday they could get a job-creating bill through both houses soon for President Barack Obama to sign into law. Senate Majority Leader Harry Reid said he planned to bring up the $15 billion package of tax cuts and highway spending for a vote on Tuesday or Wednesday.
Adding to worries about the economy, the latest reading of Standard & Poor’s/Case-Shiller indexes showed U.S. home prices unexpectedly slipped in December, but the annual rate of decline slowed, reinforcing that the housing market is on an uneven path to recovery.
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.
A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.
U.S. commercial real estate is unlikely to show meaningful recovery before next year, a real estate group said, citing high vacancy rates. The National Association of Realtors said many property owners would be forced to make concessions on rent.
However, consumers increased their purchases on home maintenance and improvements. Top home-improvement chain Home Depot Inc reported its first quarterly same-store sale rise in nearly four years and gave an upbeat full-year forecast.
Target Corp’s CEO said both the economy and its business were meaningfully improved from a year ago.
But there was bad news on the banking sector as regulators reported that the number of “problem” U.S. banks jumped 27 percent during the fourth quarter of 2009, to 702. That was the highest level since 1993.
Additional reporting by Lynn Adler, Emily Flitter, Emily Kaiser and Dhanya Skariachan; Editing by Dan Grebler
Our Standards: The Thomson Reuters Trust Principles.