SYMBOL LOOKUP
HOME
By Timothy R. Homan
June 24 (Bloomberg) -- Consumer confidence probably fell this month to the lowest level in more than 15 years, raising the risk that Americans will retrench after spending their tax rebates, economists said before reports today.
The Conference Board's confidence index fell to 56, the lowest level since October 1992, from 57.2 in May, according to the median estimate in a Bloomberg News survey. A separate report may show home prices dropped at a faster pace.
Falling property values, rising unemployment and higher food and fuel bills have shaken consumers and may cause purchases to slump once the rebate money is gone. While price increases signal the Federal Reserve may raise borrowing costs later this year, policy makers are forecast to hold the target rate unchanged tomorrow as concern over growth lingers.
``Some of the decline in consumer confidence reflects the stagflationary element -- the higher costs as well as the reduced employment opportunities,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. ``The Fed at this point is on hold.''
The Conference Board, a private New York-based research group, is due to issue its confidence report at 10 a.m. Estimates of the 69 economists surveyed ranged from 50 to 60.
Earlier this month, the Reuters/University of Michigan preliminary index of consumer sentiment for June fell to the lowest level since 1980. The report also showed Americans forecast inflation for the next five years will be 3.4 percent, matching May's reading as the highest since 1995.
House Prices
A report from S&P/Case-Shiller at 9 a.m. may show house prices in 20 U.S. metropolitan areas plunged 16 percent in April from a year earlier, the most since records began in 2001, according to the median estimate of economists surveyed. Forecasts ranged from declines of 15.4 percent to 17 percent.
The housing slump and concerns over rising food and energy costs mean the Fed has to contend with a slowing economy and increases in commodity prices. Investors project the Fed will raise the benchmark rate at their September meeting, according to futures prices.
Economists are less convinced the Fed's preferred inflation gauge, known as the core rate because it excludes food and energy costs, will spiral out of control.
``A very weak economy will limit core inflation and continue to boost the unemployment rate, thereby keeping the Fed on the sidelines for the foreseeable future,'' said Joshua Shapiro, chief U.S. economist, Maria Fiorini Ramirez Inc. in New York.
Slower Growth
The economy will probably expand at a 0.5 percent annual pace from April through June, according to the median estimate of economists surveyed by Bloomberg News earlier this month. It would be the slowest rate of growth since 2002.
Consumer spending, which accounts for more than two- thirds of the economy, has been hampered by the jump in food and fuel costs, causing Americans to cut back on purchases of more expensive items like automobiles.
Ford Motor Co., the second-biggest U.S. automaker, last week said U.S. sales of large pickup trucks will decline significantly because of $4-a-gallon gasoline.
Alan Mullaly, chief executive officer of the Dearborn- Michigan-based company, said in a statement that demand for pickups and sport-utility vehicles is ``at one of the lowest levels in decades.''
Bloomberg Survey
================================================
Case Shil Consumer
Monthly Conf
YOY% Index
================================================
Date of Release 06/24 06/24
Observation Period April June
------------------------------------------------
Median -16.0% 56.0
Average -16.0% 56.0
High Forecast -15.4% 60.0
Low Forecast -17.0% 50.0
Number of Participants 23 69
Previous -14.4% 57.2
------------------------------------------------
4CAST Ltd. -15.8% 53.5
Action Economics -15.8% 57.0
Aletti Gestielle SGR --- 54.0
Argus Research Corp. --- 58.0
Banc of America Securitie --- 56.5
Bank of Tokyo- Mitsubishi --- 55.6
Bantleon Bank AG --- 54.8
Barclays Capital --- 53.0
BBVA --- 56.0
BMO Capital Markets -16.0% 56.0
BNP Paribas --- 57.0
Briefing.com --- 57.0
Calyon --- 56.5
CFC Group -15.8% 56.5
CIBC World Markets --- 60.0
Citi --- 56.0
ClearView Economics -15.5% ---
Commerzbank AG --- 55.0
Credit Suisse --- 51.0
Daiwa Securities America --- 56.0
DekaBank -15.8% 56.0
Desjardins Group -15.4% 56.5
Deutsche Bank Securities --- 56.0
Deutsche Postbank AG --- 56.0
Dresdner Kleinwort -15.8% 56.0
DZ Bank -16.0% 59.0
First Trust Advisors --- 56.4
Fortis -16.0% 56.5
Goldman, Sachs & Co. --- 57.0
H&R Block Financial Advis --- 55.5
Helaba --- 56.0
High Frequency Economics --- 60.0
Horizon Investments --- 55.3
HSBC Markets -15.4% 57.0
IDEAglobal -16.0% 56.0
Informa Global Markets --- 56.0
ING Financial Markets -15.9% 56.5
Insight Economics --- 55.0
Intesa-SanPaulo --- 56.0
J.P. Morgan Chase --- 56.0
Janney Montgomery Scott L -16.4% 57.5
JPMorgan Private Client --- 57.0
Landesbank Berlin --- 50.0
Landesbank BW -16.5% 56.5
Lehman Brothers -16.0% 55.0
Maria Fiorini Ramirez Inc --- 56.0
Merk Investments --- 56.6
Merrill Lynch --- 57.0
Moody's Economy.com --- 56.0
Morgan Stanley & Co. --- 55.0
National Bank Financial --- 56.0
National City Corporation --- 57.0
Newedge --- 57.4
Nord/LB --- 54.5
RBS Greenwich Capital --- 52.0
Ried, Thunberg & Co. -16.0% 57.0
Schneider Trading Associa --- 55.2
Scotia Capital -17.0% 56.0
Standard Chartered -16.2% 57.0
Stone & McCarthy Research --- 57.0
Thomson Financial/IFR --- 54.0
Tullett Prebon --- 56.0
UBS Securities LLC -16.3% 56.5
Unicredit MIB -15.9% 59.0
University of Maryland --- 56.5
Wachovia Corp. --- 54.0
Wells Fargo & Co. --- 57.0
WestLB AG -15.9% 56.8
Westpac Banking Co. -16.0% 56.0
Wrightson Associates --- 57.0
================================================
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
Last Updated: June 24, 2008 00:01 EDT
