Consumer confidence falls for fifth month in a row to lowest level since 1996

NEW YORK -- Consumer confidence in February fell to its lowest level in more than four years, undermined by increased pessimism about jobs and the economy.

The Conference Board reported Tuesday that its Consumer Confidence Index dropped to 106.8, down from 115.7 in January. It marked the fifth consecutive drop in the monthly index, which fell to its lowest point since June 1996.

"The erosion in consumer confidence continues to be fueled by weakening expectations regarding business and employment conditions," said Lynn Franco, director of the Conference Board's Consumer Research Center.

But the economy continues to walk a tightrope, avoiding a plunge into recession, Franco added.

"While the short-term outlook continues to signal a severe economic downturn, consumers' appraisal of current economic conditions suggests we are still undergoing moderate economic growth and not a recession," she said.

The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is considered a key indicator because consumer spending accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.

Two other reports released Tuesday also indicated weakness in the economy.

The Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods plunged in January to their lowest level in 19 months. The department also said new-homes sales plummeted by 10.9 percent in January, the biggest drop in seven years.

The markets were lower, with the Dow Jones industrial average down 49 points to 10,593 and the Nasdaq composite index off 46 points to 2,261.

Economist Joel Naroff said the reading on confidence, combined with the housing figures, show consumers are badly shaken.

"Consumers are seeing all the layoff news, they're hearing all the doom and gloom comments and they've gotten worried, there's no question about it," said Naroff of Naroff Economic Advisors in Holland, Pa.

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