US consumer cheer dives

CONFIDENCE among US consumers dived unexpectedly low in June, despite encouraging signs the worst of the housing slump may be over.

The Conference Board’s sentiment index fell to 49.3 in June from 54.8 in May, suggesting the economy is still firmly in the grip of recession.

The lack of consumer confidence reflects a weak labour market and rising energy costs, but goes against the latest news that house prices have not dropped as dramatically as expected.

One glimmer of hope was increased house prices in some parts of the US.

Standard & Poor’s / Case Shiller home price indexes showed prices of single-family homes went down in April compared to the previous month, butonly by 0.6 per cent rather than the 1.8 per cent decline predicted by economists.

Stocks fell after the confidence gloomy report, which proved households remain worried about what the coming months will bring.

Billionaire investor George Soros added to the sombre mood, saying that rising borrowing costs posed a threat to any eventual economic recovery.

“As markets revive, fear of inflation will drive up interest rates, which will choke off recovery,” he said.