Consumer confidence slipped this month as more people worried that the job market is worsening.
The latest survey from Conference Board showed a decline even after people increased their holiday spending at the biggest rate in four years.
The private research group said Tuesday its Consumer Confidence Index fell to 52.5 in December, down from a revised 54.3 in November. Economists were expecting 55.8. The decline reverses two consecutive months of increases. It takes a reading of 90 to indicate a healthy economy, a level not approached since the recession began in 2007.
The declines come even as other economic indicators suggest layoffs are slowing, businesses are buying more goods, and consumers are spending more money. Economists have raised their growth forecasts for the final months of the year and 2011.
Still, home prices are dropping in the nation’s largest cities and are expected to fall through next year. Every city in the Standard & Poor’s/Case Shiller 20-city home price index showed a monthly price decline — the first time that has happened since Feb. 2009.
And the unemployment rate increased to 9.8 percent in November from 9.6 percent in October.
“Although the economy is growing again, consumer attitudes are lagging behind broader economic developments,” said Steven Wood, chief economist at Insight Economics. Woods said people are more concerned with high unemployment, falling home prices and the number of foreclosures.
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity.
One measure of the Confidence Index, which assesses how shoppers feel now about the economy, declined to 23.5 in December, from 25.4 in November. The other barometer, which measures how shoppers feel about the economy over the next six months, fell to 71.9 from 73.6 in November.
“Despite this month’s modest decline, consumer confidence is no worse off today than it was a year ago,” said Lynn Franco, director of Consumer Research Center at The Conference Board, in a statement. “Consumers’ assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious. ”
Therefore, she said, that all signs continue to suggest the economic expansion will continue well into 2011, but at a moderate pace.
The Consumer Confidence Index is based on a survey of 5,000 consumers with a cutoff date of Dec. 20.