House prices, consumer confidence dive (Reuters)
NEW YORK (Reuters) - Consumer sentiment slid to a 16-year low in June while house prices suffered record annual drops in April, according to data Tuesday that suggested a retrenchment in spending that will keep squelching economic growth.
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The Conference Board's monthly survey of consumers showed the overall index of consumers' mood fell to 50.4 in June, the lowest since 47.3 in February 1992.
The index has now dropped by more than half since 111.90 last July, before the housing market troubles triggered the most severe credit crisis in at least a decade.
"To put it in perspective, that's a bigger decline than what we saw after the September 11 attack and Hurricane Katrina," said Dana Saporta, economist at Dresdner Kleinwort Securities.
"It sends out the signal that the consumers are not about to ramp up their spending," she said. "We worry about the contraction in the economy once the tax rebates dissipate."
In addition, the survey showed an index measuring consumer expectations for the future sank to a record low as inflation forecasts matched an all-time high this month.
The inflation threat has been highlighted in the past 24 hours by massive price increases announced by some of the world's largest basic materials conglomerates.
First, mining titan Rio Tinto (RIO.L) (RIO.AX) secured an agreement with China's largest steel maker to nearly double the price Rio gets for iron ore, and rival producer BHP Billiton (BHP.AX) (BHT.L) is expected to follow through with similar price hikes.
Then early Tuesday, Dow Chemical Co. (DOW.N) said it would raise prices up to 25 percent, just weeks after the largest U.S. chemicals maker implemented a 20 percent across-the-board price increase.
U.S. home prices in April, meantime, extended their record annual slump in April although the pace of decline subsided a bit in the month, according to S
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