- The Washington Times - Wednesday, April 30, 2008

NEW YORK (AP) — From soaring gas prices to weaker job prospects, Americans are gloomier about the economy than just before the U.S. invasion of Iraq. They are so anxious that fewer people say they are planning to take a vacation than in 30 years.

And those are worrying signs for the already deteriorating economy because eroding consumer confidence foreshadows weaker spending.

A widely watched measure of sentiment dropped to a five-year low in April, the fourth straight month of declines. The Conference Board said yesterday that its Consumer Confidence Index fell to 62.3 in April, down from a revised 65.9 last month and 76.4 in February.

That was in line with the expectations of Wall Street economists, but leaves the index at its weakest point since it registered 61.4 in March 2003, ahead of the Iraq invasion.

“There isn’t a lot for the consumers to be optimistic about,” said Gary Thayer, senior economist at Wachovia Securities.

Economists closely watch sentiment readings because consumer spending accounts for more than two-thirds of the nation’s economic activity.

The downbeat news came as the closely tracked Standard & Poor’s/Case-Shiller Index showed that housing prices dropped in February at the fastest rate ever, illustrating that the housing slump is gaining momentum.

Meanwhile, the number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, according to a RealtyTrac Inc. report.

According to the Conference Board, the index that measures shoppers’ current assessment of economic conditions dropped to 80.7 in April from 90.6 in March.

The index that gauges their outlook over the next six months was little changed at 50.1, compared with 49.4 in March.

“This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but the economic conditions may have slowed even further,” said Lynn Franco, director of the Conference Board Consumer Research Center. “And not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns.”

The Consumer Confidence Report, derived from responses received through April 22 of a representative sample of 5,000 U.S. households, has a margin of error of plus or minus 2.5 percentage points.


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