LITTLE ROCK — Consumer confidence rose for the second-straight month as more Americans expect the nation’s economy to improve in 2010, the Conference Board reported Tuesday.
Expectations for the job market reached their highest level in two years, but most people remain downbeat about their current prospects. The survey also showed that fewer people plan to buy automobiles and houses in the next six months compared with November.
Another report showed that house prices climbed in October for a fifth consecutive month.
Attitudes about current conditions decreased to the lowest level in 26 years, and wage expectations also fell, a reminder that the employment slump has shaken consumers. Gains in home and stock prices are helping households recover some of the record $17.5 trillion drop in wealth, which may help sustain spending next year.
The Conference Board’s Consumer Confidence Index rose in December for the second month in a row, to 52.9, from a revised 50.6 in November.
“We’re going to need a more definitive improvement in the labor market before confidence improves more than it has,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York, who forecast a rise to 53 for confidence. “The housing numbers are encouraging, but apparently they’re not having much influence on consumer attitudes. Consumers are focusing more on the job market than the housing market.”
Stocks fell for the first time in seven days as declines in energy, financial and technology companies wiped out earlier gains. The Standard & Poor’s 500 Index dropped 0.1 percent to close at 1,126.2.
The S&P/Case-Shiller index of home prices in 20 U.S. cities rose 0.4 percent in October from the previous month on a seasonally adjusted basis, the group said Tuesday. The gauge was down 7.3 percent from October 2008, the smallest year-over-year decline since October 2007.
Economists surveyed by Bloomberg News forecast that the confidence measure would increase to 53, according to the median of 64 projections, from a previously reported 49.5 in November. Estimates ranged from 46 to 56.5.
The group’s index averaged 45.2 this year, the lowest annual rate since records began in 1967. The measure averaged 58 in 2008 and 103.4 in 2007.
The Conference Board’s measure of present conditions decreased to 18.8, the lowest level since February 1983, from 21.2 the previous month. Fewer people said jobs are plentiful, while the proportion of those who said jobs are hard to get also decreased.
The share of people who expect their incomes to rise over the next six months decreased, while more Americans expected employment will improve.
“If consumers are worried about income, they’re not going to be out there spending a whole lot,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. “The economy is moving forward but not at a particularly great pace.”
A national jobless rate that is forecast to exceed 10 percent through the first half of next year may prompt policymakers and retailers to maintain tax breaks and incentives to entice buyers. Arkansas’ unemployment rate for November was 7.4 percent.
Consumer buying plans for automobiles and real estate dropped this month, Tuesday’s Conference Board report showed. Home-buying expectations fell to the lowest level since 1982.
“It’s clear that consumer concerns about unemployment levels and the economic climate are weighing on spending,” Walgreen Co. Chief Executive Officer Gregory Wasson said in a conference call with analysts Dec. 21. “Consumers are focused on value and discretionary items.”
To help ensure that housing doesn’t weaken again, President Barack Obama and Congress last month extended a tax credit for first-time buyers until April 30 from Nov. 30, and expanded it to include some current owners.
A surge in home purchases by first-time U.S. buyers is doing little to help real estate agents and brokers who close the deals.
Commissions in 2009 fell to the lowest level in seven years, driven down by sales of low-priced homes to first time buyers using the federal tax credit. Commissions through November dropped 6.2 percent from a year earlier to $40.6 billion, according to Bloomberg calculations based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors.
The S&P/Case-Shiller report showed that home prices in 11 of the 20 areas covered increased on a seasonally adjusted basis compared with the previous month, while eight had a decline. The biggest month-to-month gain was in San Francisco, which climbed 1.7 percent.
Economist Joel Naroff of Naroff Economic Advisors said he doesn’t think the October reading foretells a new trend. He predicted that by spring housing prices could show a year-over-year increase.
“They are not likely to be strong, but up is a lot better than down,” he said in a report.
All of the areas in the S&P/ Case-Shiller index showed a smaller year-over-year decline than in September.
Prices in the top 20 cities are still down 7.3 percent compared with October 2008 and are 29 percent below the index’s all-time peak reached in July 2006. From July 2006 to April 2009, home prices fell as much as 32.6 percent.
Information for this article was contributed by Courtney Schlisserman and Bob Willis of Bloomberg News, Anne D’Innocenzio of The Associated Press and Jeffry Bartash of MarketWatch.
Front Section, Pages 1 on 12/30/2009