Consumer confidence crumbled in April as rising gasoline prices undermined how Americans feel about the prospects for economic growth, a widely watched gauge of the economy showed on Tuesday.
The New York-based Conference Board said its Consumer Confidence Index dropped to 104.0, in April, down from a revised 108.2 in March. Analysts had expected a reading of 105. The April reading was the lowest since August, when the index was at 100.2.
The Present Situation Index, which measures how shoppers feel now about economic conditions, decreased to 131.3 from 138.5 in March. The Expectations Index, which measures consumers’ outlook for the next six months, declined to 85.8 from 87.9.
“Unlike the decline in March, which was solely the result of apprehension about the short-term outlook, this month’s decline was a combination of weakening expectations and a less favorable assessment of present-day conditions,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. “Rising prices at the gas pump continue to play a key role in dampening consumers’ short-term expectations.”
Franco noted that the decline in the Present Situation Index — the first decline in six months — needs to be watched closely in the months ahead.
Consumer spending accounts for two-thirds of all U.S. economic activity.
Although the nation’s retailers reported strong sales in March, analysts are concerned about a slowdown in business in the coming months. A number of problems — rising gas prices, a rougher housing market and the specter of higher interest rates — may force consumers to spend less.
While gas prices rise — the average price is $2.869, up about 33 percent over a two-month period — the housing market continues to weaken.
The National Association of Realtors reported on Tuesday that sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems from loans to people with poor credit. The group said that sales of existing homes fell by 8.4 percent in March, compared to February. It marked the biggest one-month decline since a 12.6 percent drop in January 1989. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.
The report also showed an eighth straight fall in median home prices, the longest such period of declining prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.