NEW YORK (AP) ― Rising prices at the gas pump and in grocery aisles are starting to crimp shoppers’ outlook.
The Conference Board’s Consumer Confidence Index fell sharply from a three-year high in February, reversing five straight months of improvement.
The decline raises questions about Americans’ ability and willingness to spend in coming months.
The index fell more than expected to 63.4 from a revised 72.0 in February. Economists expected 65.4, according to FactSet.
The drop was the steepest since the 10.1-point plunge from January 2010 to February 2010, when the U.S. stock market was hammered by worries about Greece’s national debt.
“Rising food and gasoline prices are starting to take their toll on the consumer psyche, and Japan’s triple calamity ― earthquake, tsunami and nuclear disaster ― has been very unsettling,” said Chris Christopher Jr., senior principal economist at HIS Global Insight.
The index measures how Americans feel about business conditions, the job market and the next six months.
It has hovered in a tight range from the high 50s to low 60s over the past year, far below the 90 that indicates a healthy economy. The index hasn’t approached that level since the recession began in December 2007.
A housing slump that isn’t over and won’t be for a while isn’t helping.
Home prices are falling in most major U.S. cities, and the average prices in four of them are at their lowest in 11 years, according to Standard & Poor’s/Case-Shiller report released Tuesday. On Friday, the Commerce Department said new-home sales plunged in February, the third month in a row.
The falling Consumer Confidence Index is in line with Gallup Poll’s weekly surveys, which have registered a slide in confidence since mid-February.