Instability in the economy has led to a considerable decline in consumer confidence. According to the Conference Board, the consumer confidence index fell 4 points from the previous month. The confidence drop was attributed to several factors, including the increasing gasoline prices and rising subprime mortgage rates. Consumers are also expecting inflation rates to rise within the next 12 months.

The decrease in confidence prompted the US stocks to experience losses. The dollar also slipped against the euro after the report was announced.

Gasoline Price Hikes

Compared to last week, gasoline prices again increased 3 centavos. This is the 8th consecutive week that gasoline prices increased. Current gasoline prices are also the highest they have been in the last 7 months.

Housing Problems

The increasing subprime mortgage rates are also bad news for borrowers with poor credit. Likewise, the prices of U.S. homes were also noted to have decreased about 3% from the previous month. These housing problems may force lenders to enforce tighter credit policies, resulting in lower spending and preventing economic growth.

Current Economic State

On a positive note, consumer index for the current economic state was higher by 0.5 than the previous month. This positive view of the economy may be attributed to the availability of jobs. Of those surveyed, 30.5% said that jobs were plentiful, a 2.7% increase from the previous month.

Consumer Confidence Survey

The Consumer Confidence Survey is a monthly survey conducted by the TNS research company. The survey samples 5,000 representative US households. The Consumer Confidence Survery is performed for The Conference Board, a leading international business research organization. For more information, see www.conference-board.org.

[image from umich.edu and cyncipost]