By Courtney Schlisserman and Shobhana Chandra
(Bloomberg) — 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 will be restrained by rising unemployment.
The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.
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.
“As long as you have increasing unemployment, consumer confidence will remain mired in the muck,” said Joseph Brusuelas, an economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast a drop in sentiment. “We think we are going to have another rough patch in the housing market” after a government tax credit expires, he said.
