Consumer Confidence Unexpectedly Rises

NEW YORK -- Consumer confidence rose in November amid receding gas prices, but Americans' views on the economy remain the gloomiest in decades as they grapple with massive layoffs, slumping home prices and dwindling retirement funds.

The New York-based Conference Board said Tuesday its Consumer Confidence Index now stands at 44.9, up from a revised 38.8 in October. Last month's reading was the lowest since the research group started tracking the index in 1967.

Economists surveyed by Thomson Reuters expected the November reading to slip to 37.9. Still, the figure is about half of what it was a year ago, and hovers around levels not seen since December 1974, when the index was 43.2.

The Present Situation Index declined to 42.2 from 43.5 last month. The Expectations Index, which is consumers' assessment of the economy over the next six months, increased to 46.7 from 35.7 in October.

"The persistent declines in the Present Situation Index suggest that the economy has weakened further in the final months of this year," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "But despite the improvement in the Expectations Index this month, consumers remain extremely pessimistic and the possibility that economic growth will improve in the first half of 2009 remains highly unlikely."

Wall Street closely monitors sentiment as consumer spending represents about two-thirds of all economic activity.

Shoppers' pessimistic mood is a big challenge for the nation's stores, which are preparing for the official start of the holiday shopping season. The season already was expected to be the weakest in decades, but the spending outlook has darkened further since September as consumers have slammed on the brakes while grappling with the fallout from the escalating financial crisis. That includes rising layoffs across all sectors of the economy, and rapidly declining household wealth.

Mark Vitner, a senior economist at Wachovia, predicts that total retail sales for the combined November-December period will drop by 0.5%, the first decline since the 1982 holiday shopping season, when consumers were also were dealing with massive layoffs.

Meanwhile, a report on home prices released Tuesday showed further deterioration in the housing market, another sign that doesn't bode well for consumer spending. The Standard & Poor's/Case-Shiller U.S. National Home Price Index said that home prices tumbled a record 16.6% during the third quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

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