U.S. consumer mood brightens, but home price gains slow

Tue Dec 31, 2013 12:59pm EST
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By Steven C. Johnson

NEW YORK (Reuters) - U.S. consumers' mood improved as 2013 drew to a close, with many optimistic about their future job prospects, while home prices rose again in October, though the pace of gains slowed.

The data releases provided more evidence of strength in the U.S. economy, which appears to have overcome headwinds caused by an autumn government shutdown, higher taxes and rising mortgage rates.

"Things still look pretty solid at the end of 2013. We had better GDP growth even though interest rates have gone up with the Fed," said Gus Faucher, senior economist at PNC Financial Services, adding "2014 will be a better year with less fiscal drag."

The rise in the Conference Board's index of consumer attitudes to 78.1 in December brought it to within reach of levels last seen before a standoff in Congress over fiscal policy caused the government to shut down in October.

Consumers were optimistic about the present - the present situation index hit its highest level since April, 2008 - and the future, particularly the job outlook.

"Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began," Lynn Franco, director of economic indicators at The Conference Board, said in a statement.

A separate report showed the S&P/Case Shiller composite index of home prices in 20 metropolitan areas increased 13.6 percent in October from a year ago, the strongest gain since February 2006.

Price gains on a monthly basis, however, slowed to 0.2 percent from 0.7 percent in September, suggesting higher mortgage rates have slowed home-buying activity.   Continued...

A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo. REUTERS/Jim Young/Files