US consumer confidence tanks

WASHINGTON (AFP) - US consumer confidence fell sharply in October amid growing worries about rising unemployment, the Conference Board reported Tuesday.
The consumer confidence index, which declined for the second consecutive month, dropped in October to 47.7 from 53.4 in September.
The index drop was much steeper than the 53.5 level expected by most analysts.
The downbeat reading raised a red flag over consumer spending in the fourth quarter, when retailers rely heavily on holiday sales.
Lynn Franco, research director of the Conference Board, said that labor market condition played a major role in this grimmer assessment.
Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays.
Meamwhile, home prices in major US cities fell in August but posted the smallest drop in 19 months, a survey showed Tuesday, signaling the housing slump at the center of financial crisis is stabilizing. The Standard & Poors/Case-Shiller index showed an 11.3pc year-over-year decline in home prices in 20 major metropolitan areas the smallest drop since January 2008.
Analysts had expected an 11.9 percent fall in August.
On a seasonally adjusted basis, prices rose 1.0 percent from July to August this year, following a 1.2 percent gain in the June-July period and a 0.9 rise in May-June. That means prices rose at a 6.7 percent annualized rate in the three months to August, compared to the previous three months, said Ian Shepherdson, chief US economist for High Frequency Economics.
In the 10 top markets, prices fell 10.6 percent in August from a year ago. Nineteen of the 20 metro areas and both composites showed an improvement in the annual rates of decline with Augusts readings compared with July, the report said. Cleveland, Ohio, was the only exception.
Broadly speaking, the rate of annual decline in home price values continues to improve, said David Blitzer, chairman of the index committee at Standard & Poors.
The two composites and 19 of the 20 metro areas showed an improvement in the annual rates of return, as seen through a moderation in their annual declines.
Home prices contracted after a severe home mortgage meltdown that sparked a financial crisis, plunging the economy into a recession in December 2007.
The market has been benefiting from a tax credit of 8,000 dollars for first-time buyers that expires on November 30. Many buyers are rushing to sign contracts to be sure to close the deal before the credit expires.
The turnaround is partly a reflection of the rise in home sales, which is in turn partly due to the tax credit, and a substantial drop in inventory, said Shepherdson. The tax credit seems likely to be extended but we worry about a wall of supply next spring from both private sellers and foreclosures. Still, for now these are welcome numbers.