Consumer confidence hits new low

NEW YORK (AP) — Americans’ already-battered confidence in the economy went into free fall in February, sinking to new lows as consumers grow more fearful over massive job cuts and shrinking retirement accounts.

Fresh economic news out Tuesday likely will compound their gloom.

Major retailers including Target Corp., Home Depot and Macy’s Inc. reported depressed fourth-quarter results. Another widely watched index showed home prices tumbled by the sharpest annual rate on record and Federal Reserve Chairman Ben Bernanke said the economy is suffering through a “severe contraction” that’s likely to keep shrinking in the first half of this year.

The New York-based Conference Board said its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. That was well below the 35.5 level that economists surveyed by Thomson Reuters expected.

The index, which had hovered in the high 30s over the past few months, broke new lows since it began in 1967. A year ago, the consumer confidence reading stood at 76.4.

The Present Situation index, which is consumers’ assessment of current economic conditions, fell to 21.2 from 29.7 last month. The Expectations’ Index, which is consumers’ outlook over the next six months, sank to 27.5 from 42.5.

“Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Franco added that the report showed worries about inflation, which had eased over the past several months, picked up. Economists carefully monitor consumer confidence since consumer spending accounts for more than two-thirds of economic activity.

Signs of a further collapse in consumer confidence is bad news for the economy and stores, whose success hinges on them being in the mood to spend. Economists already feared that shoppers’ moods likely will remain battered throughout most of the year as employers continue to slash jobs at a torrid pace. But the latest report shows confidence may not have hit bottom.