Consumer confidence rose to its highest since March 2008, data showed on Tuesday, defying for now the growing fears about European debt market turmoil and threats to global growth.
Improving sentiment about the battered labor market was key to consumers recovering their nerve, as the Conference Board's report said fewer of those surveyed found jobs "hard to get." Consumers account for more than two-thirds of U.S. economic growth.
As concerns about the labor market continued to ease, U.S. consumer confidence rose for the third-straight month in May, to 63.3, the best level since March 2008, from a downwardly revised 57.7 in April.
The median of forecasts from analysts polled by Reuters was for a reading of 59.0 in May.
Financial markets were little affected by the data, with worries about Europe's banking sector the main focus. Treasuries prices rose and major U.S. stock indexes lost 2 percent or more each.
The May consumer survey results showed Americans were little affected by the sharp sell-off in U.S. stock markets earlier this month.
The Dow Jones Industrial Average on May 6 briefly fell nearly 1,000 points — its biggest-ever intraday point drop. But because the Conference Board survey's cut-off date for the latest survey was May 18, the jury is still out on how consumers have reacted to the latest leg down in markets.
HOME PRICES FLAT
Housing, a cornerstone of the U.S. economy that crumbled in the credit crisis and contributed to the most protracted recession in decades, remains shaky, data showed.
Single-family home prices in 20 major cities were unchanged in March from February, but fell in the first quarter on renewed price pressure as federal aid faded away, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
Prices have rebounded from lows hit during the crisis, yet the end of tax incentives for homebuyers combined with mounting foreclosures suggests more weakness, S&P said.
For the first three months of the year, S&P's national home price index fell 3.2 percent, unadjusted, compared with a 1 percent drop in the fourth quarter. The index was up 2 percent, however, from the same quarter a year ago.
The Federal Housing Finance Agency's house price index for March, also released on Tuesday, showed prices for U.S. single-family homes rose a seasonally adjusted 0.3 percent after falling by a revised 0.4 percent, which was previously reported as an 0.2 percent dip. Home prices dropped 1.9 percent in the first three months of the year.
After the worst recession in 70 years, the health of the economy is a key issue for American voters in the run-up to congressional elections in November that are expected to be rough on the Democrats and on many incumbent politicians.
