US Consumers Grow More Pessimistic

Posted August 30th, 2011 at 2:40 pm (UTC-5)
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Americans' confidence in the economy fell sharply in August, with the consumer confidence index hitting its lowest level in two years.

Tuesday's report from the Conference Board says consumers grew even more worried about jobs during the month. The business research group says consumers may have also been discouraged by political bickering in Washington over the debt ceiling, government spending, taxes, and the economy. They have also been influenced by falling prices for homes.

Experts watch consumer attitudes because they can influence the spending that drives most U.S. economic activity.

A separate report from a private research group showed home values continued falling in the 12 month period that ended in June. While overall prices are down 4.6 percent for the year, the rate at which prices are declining slowed slightly. That is due in part to a few cities seeing prices rising in the past few months.

Severe problems in the housing market sparked the economic crisis, and continue to inhibit the recovery.

The slow pace of economic recovery was on the minds of top officials of the U.S. central bank earlier this month when they announced that they will probably keep interest rates at record lows until mid-2013.

In a summary of their discussion published Tuesday, Federal Reserve officials said the economy is growing more slowly than expected, while unemployment remains high. The gloomy economic conditions prompted some Fed officials to call for stronger action, but they were outvoted.

Friday, government experts will release the U.S. unemployment rate, which is expected to stay at a relatively high 9.1 percent. Economists surveyed by news agencies also predict that the economy will produce a net gain of just 75,000 jobs, far too few to cut the high unemployment rate.