Consumer Confidence Down?

While indirectly related to real estate, confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending continues to be restrained by rising unemployment.

The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid.

Home sales have gotten a boost from the $8,000 tax credit for first-time home buyers and mortgage rates that have been held near historic lows by the Fed’s program to buy $1.2 trillion of mortgage-backed securities.

“The good news about this is it really looks like a bottom,” Karl Case, an economics professor at Wellesley College and co-creator of the S&P/Case-Shiller index, said recently in an interview on Bloomberg Radio. “The two risks are, employment is terrible and the pipeline is still full of foreclosures. That has to be cleared out eventually for this to really turn up and produce a recovery.”

The homebuyer tax credit, due to expire at the end of November has been extended through April 30 of next year. First-time buyers who are in the process of making a purchase don’t need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit.

We’d love to know what you think! Where is your confidence level in the economy? Up, down, unchanged? Use the comment link below to sound off and tell us what you think of the economy today. Your email address will not be published with your comment, so please feel free to tell us REALLY how you feel.