Consumer confidence hits new low; home values continue to slide

WASHINGTON -- Consumer confidence plummeted to yet another historic low, home prices continued to decline and unemployment soared to 10% or more in some states, according to downbeat reports Tuesday.

The New York-based Conference Board said its Consumer Confidence Index fell to an all-time low of 37.7 in January, down from 38.6 in December. The index, based on a telephone survey of 5,000 households through Jan. 21, stood at 87.3 a year ago.

"Consumers have begun the New Year with the same degree of pessimism that they exhibited in the final months of 2008," said Lynn Franco, director of The Conference Board Consumer Research Center.

While Americans had a somewhat less gloomy assessment of the job market, just 10% expected their incomes to increase in coming months, down from 12.7% in December. That's a bad sign, since consumer spending accounts for about two-thirds of economic activity. Further, the survey was completed before a host of major companies, including Microsoft and Caterpillar, announced major layoffs.

A separate report painted a grim picture of the housing market. Home prices in 20 select cities continued to decline in November 2008, and were down 18.2% from a year earlier. Overall, the Standard & Poor's Case-Shiller 10-City index has fallen 26.6% from its 2006 peak, and its broader 20-city index is off by 25.1%. Eleven of the 20 metro areas had record annual price declines in November.

While housing foreclosures are spreading as the overall economy deteriorates, there are some regional differences. In Phoenix, prices have plummeted 32.9% in the past year. In Dallas, prices are down 3.3%.

"The main force driving house prices down are foreclosures, which are still rising," said Patrick Newport, U.S. economist at IHS Global Insight. Newport said that even though the Obama administration is working on ways to limit foreclosures, it will take time and "trial and error" to tackle the problems.

There have been some recent signs of improvement in the market. Still, Newport and others say the housing market has yet to hit bottom.