U.S. Consumer Confidence Unexpectedly Fell This Month

Sept. 29 (Bloomberg) -- Confidence among U.S. consumers unexpectedly fell in September as a rising unemployment rate weighed on households.

The Conference Board’s confidence index dropped to 53.1, from a revised 54.5 in August, a report from the New York-based group showed today. Measures of present conditions and expectations for six months from now both declined. The index has climbed from a record low of 25.3 reached in February.

Unemployment is forecast to rise to 10 percent this year, even as the monthly pace of job losses slows. Today’s report corroborates the Federal Reserve’s assessment last week that sluggish income growth and tight credit are curbing household spending and slowing the pace of the economic recovery.

“It’s a little hard for households to look at their paychecks, or the lack thereof, and feel more confident,” Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in a Bloomberg Television interview. Even so, “we should continue to see consumer confidence turn around,” because the recession is over and hiring eventually will rebound, she said.

Consumer confidence was projected to increase to 57 this month, from an originally reported reading of 54.1 in August, according to the median estimate in a Bloomberg News survey of 78 economists. Forecasts ranged from 54 to 70. The index averaged 58 last year.

Stocks Fluctuated

Stocks on the Standard & Poor’s 500 Index fluctuated as a separate report showed home values in 20 U.S. metropolitan areas fell less than forecast in the year ended in July, a sign the housing slump that led to the worst recession in seven decades is abating. The S&P 500 was up 0.1 percent to 1,064.23 as of 10:33 a.m. in New York.

The S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months, the group said today in New York. Adjusted for seasonal variations, the gauge rose 1.2 percent from the prior month.

The Conference Board’s measure of present conditions dropped to 22.7 from 25.4 the prior month. The gauge of expectations for the next six months decreased to 73.3 from 73.8.

The share of consumers who said jobs are plentiful fell to 3.4 percent from 4.3 percent. The proportion of people who said jobs are hard to get increased to 47 percent from 44.3 percent.

Incomes, Jobs

The proportion of people who expect their incomes to rise over the next six months increased to 11.2 percent from 10.8 percent. The share expecting more jobs decreased to 17.9 percent from 18 percent.

Plans to buy automobiles, homes and major appliances within the next six months declined in September, the report showed.

Today’s figures follow the Reuters/University of Michigan final index of consumer sentiment, which rose this month to the highest level since January 2008.

Economists say the Conference Board’s index tends to be more influenced by attitudes about the labor market.

The pace of job losses is easing as the economy shows signs of accelerating. Payrolls fell by 216,000 in August, the smallest decline in a year, according to the Labor Department.

The economy has lost 6.9 million jobs since the recession began in December 2007, making it the biggest employment slump of any downturn in the post-World War II period. Economists surveyed by Bloomberg predict unemployment may reach 10 percent by year-end, the highest level since 1983, from 9.7 percent in August.

‘Bit Better’

At the same time, steadying demand is helping some consumer-related businesses such as American Greetings Corp. The second-largest U.S. greeting-card company last week reported a gain in second-quarter profit.

“Sales are actually a bit better than what we expected,” Zev Weiss, chief executive officer of the Cleveland-based company, said on a conference call on Sept. 24. “If you look at it from a year-over-year perspective, they’re hanging in there very nicely. And in this environment, that’s pretty good.”

Companies not faring as well include Rite Aid Corp., the third-largest U.S. drugstore chain. The Camp Hill, Pennsylvania- based business cut its full-year forecast last week, saying customers will remain focused on discounts in a “tough economy.”

Confidence may improve in future months as consumers repair their balance sheets. Net worth for households and non- profit groups climbed to $53.1 trillion from $51.1 trillion in the first quarter, marking the first gain since the third quarter of 2007, according to a Sept. 17 report from the Fed.

Fed policy makers last week said they would keep the benchmark lending rate near zero “for an extended period,” while noting that the economy and housing had strengthened. They also said they would slow the central bank’s purchases of mortgage debt and extend the program through the first quarter of 2010 in order to keep lending rates low.