Confidence Decline Points to Cooling U.S. Growth

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http://www.bloomberg.com/news/2012-01-31/consumer-confidence-in-u-s-unexpectedly-drops-on-fuel-costs-job-concerns.html

Consumer confidence unexpectedly dropped in January and a gauge of business activity fell, underscoring forecasts that the U.S. economy will cool after expanding at the fastest pace since the second quarter 2010.

The New York-based Conference Board’s confidence index decreased to 61.1, lower than the most pessimistic forecast in a Bloomberg News survey of economists, from a revised 64.8 reading the prior month. The Institute for Supply Management-Chicago Inc. said its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth.

Employers aren’t hiring fast enough to drive bigger gains in wages and consumer spending, while higher gasoline prices are cutting into household budgets. Another report today showed home prices fell more than forecast in November, eroding the wealth of families as they seek to rebuild savings.

“This quarter will be a bit slower,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who had the lowest sentiment estimate. “Consumer confidence appears to have leveled off, as job growth isn’t quite as good and gasoline prices have moved back up.”