Consumer confidence drops

Falling home prices and higher food and fuel prices drove consumer confidence lower this month. The Reuters/University of Michigan Index of Consumer Sentiment fell to 80.9 this month from 83.4 in August and September. This is a significant drop from the reading of 93.6 recorded last October. The pace of growth in real personal consumption is expected to slow to 2% over the next four quarters, with the weakest quarterly growth rate of about 1% at the start of the year, according to the survey. The data also implied that additional declines in housing starts can be expected in the coming months. The Current Economic Conditions index fell to 97.7 in October from 97.9 in September. It stood at 107.3 in October 2006. The Index of Consumer Expectations fell to 70.1 from 74.1 in September. “Consumers have expressed growing concerns about the housing slump and these concerns have spilled over to less favorable prospects for the overall economy,” said Richard Curtin, the director of the Reuters/University of Michigan Surveys of Consumers. He added that the prospects for a recession “is still below 50%, but not comfortably so.”