NEW YORK (AP) - If you're a U.S. consumer, why would you be confident?
Following a string of bad economic news, consumer confidence plunged to a seven-month low in June on continuing worries about high unemployment and stagnating wages, according to a report released Tuesday by a private research group. The Conference Board's Consumer Confidence Index slipped to 58.5 in June. That's down from a revised 61.7 in May, which marked an almost six-point drop.
"A reading of 90 indicates a healthy economy on the index, which measures how Americans feel about business conditions, the job market and the next six months. Economists carefully monitor consumer confidence because consumer spending accounts for 70 percent of economic activity.
About two years after the recession officially ended, consumer confidence is still fragile. The index has lost momentum since it hovered between the high 50s and low 60s last year, and then climbed to a three-year high in February, reaching 72. June's results marked the lowest point since December 2010 when the index hit 57.8.
Economists had expected the June figure to edge up to 61 as consumers faced lower prices at the pump and inflationary fears dissipated.
Consumers had been hurt by rising gas prices that neared $4 per gallon in late April and early May, leading many to cut back on spending for everything from televisions to clothes. But since the Memorial Day weekend, gas prices have fallen to a national average of $3.57 per gallon. And oil prices have declined steeply over the last few weeks, which should eventually translate into even lower pump prices.
But the fact that consumers are experiencing less pain at the pump has been overshadowed by other economic news that ranges from mildly encouraging to downright bad.
The consumer confidence report was issued on the same day a widely watched Standard & Poors/Case-Shiller index reported that spring buying boosted home prices in 13 U.S. cities. But the report also showed that housing remains weak in most of the country. Economists say homeowners are mostly unwilling to sell their homes given the widespread declines in home values. And nearly 2 million foreclosures have hit the market over the past two years.