Reality is a drag for confidence

NEW YORK - Rising job losses and other economic realities caught up with Americans in June, pulling down a key barometer of consumer sentiment after a streak of gains built on glimmers of hope.

Some economists say the reality check offered by yesterday's report from the New York-based Conference Board may not augur well for spending in the critical months ahead.

The Conference Board said its Consumer Confidence Index now stands at 49.3, down from its revised May level of 54.8.

The drop coincided with mixed messages in the housing market. A report from the Treasury Department showed foreclosures jumped in the first quarter compared with 2008's fourth quarter. But a key housing-price index showed price declines moderating.

Lack of job security continued to plague consumers surveyed by the Conference Board. And the Labor Department, which reports June's job data tomorrow, is expected to report unemployment climbed.

"Consumers are making a more somber and accurate assessment of the economy and their own financial position," said Mark Vitner, senior economist at Wachovia. "Consumers may be thinking less bad is not good enough."

Because consumer spending accounts for more than two-thirds of economic activity in the United States, economists and investors watch it closely.

Both components of the consumer-confidence gauge fell this month. The Present Situation Index of how shoppers feel now about the economy declined to 24.8 from 29.7 in May. And the board's Expectations Index, shoppers' outlook for the next six months, dropped to 65.5 from 71.5.

Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement that the decline in consumers' view of the current economy implies "that economic conditions, while not as weak as earlier this year, are nonetheless weak."