Consumer Confidence Hits New Low as Home Prices Sink, State Unemployment Soars

As people who still have jobs worry about holding onto them, a widely watched barometer of consumer sentiment fell to a new low, a private research group said.

The Conference Board's Consumer Confidence Index edged down to 37.7 from a revised 38.6 in December. The index has hit its lowest troughs since it began in 1967, and is hovering at less than half its level of January 2007, when it was 87.3.

"It appears that consumers have begun the new year with the same degree of pessimism that they exhibited in the final months of 2008," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement, according to the Associated Press. "Looking ahead, consumers remain quite pessimistic about the state of the economy and about their earnings."

Until she sees improvement in shoppers' outlook for the economy, Franco said she can't say that "the worst of times are behind us."

Economists closely watch consumer confidence since consumer spending accounts for more than two-thirds of economic activity. But the latest signs of nervous consumers have spurred fresh alarm about the economy and the retail industry, which is struggling with the most severe spending retrenchment in decades.

Meanwhile, another closely watched index shows home prices dropping by the sharpest annual rate on record in November.

The Standard & Poor's/Case-Shiller 20-city housing index tumbled by a record 18.2 percent from November 2007, the largest decline since its inception in 2000. The 10-city index dropped 19.1 percent, tied with October for the biggest drop in its 21-year history.

Both indices have recorded year-over-year declines for 28 straight months and prices are at levels not seen since February 2004.

Prices in the 20-city index have plummeted 25.1 percent from their peak in July 2006. The 10-city index has fallen 26.6 percent since its peak in June 2006.

All 20 cities recorded year-over-year declines in November.

Prices in every region fell more than 1 percent from October. In eight metro areas, prices fell at a record monthly rate.

Phoenix and Las Vegas were hardest hit in November, with prices down 3.4 percent and 3.3 percent, respectively. The two cities also have the worst returns over the one-year period, with prices falling 32.9 percent and 31.6 percent, respectively.

"Overall, more than half of the metro areas had record annual declines," he said.

On the jobs front, state unemployment rates shot up nationwide last month, with Indiana and South Carolina racking up the largest monthly increases.

All 50 states and the District of Columbia recorded monthly increases.

The Labor Department reported that Indiana's jobless rate soared to 8.2 percent in December from 7.1 percent in November as workers were hit by layoffs in manufacturing as well as in construction and retail.

South Carolina's unemployment rate bolted to 9.5 percent from 8.4 percent as laid-off factory workers find it difficult to move into different types of jobs. Each state logged a 1.1 percentage point rise in unemployment from November to December.

The U.S. unemployment rate jumped to a 16-year high of 7.2 percent in December.

Michigan and Rhode Island were the only states to see their unemployment rates hit double digits last month.

Six states -- Massachusetts, Michigan, Nevada, New Jersey, New York and Oregon -- each posted over-the-month gains of a full percentage point in their unemployment rates in December.

Among the states with the lowest rates, Wyoming posted the lowest at 3.4 percent in December. It was followed closely by North Dakota at 3.5 percent and South Dakota at 3.9 percent.

The U.S. recession, which started in December 2007, is on track to be the longest downturn since World War II.