Americans' confidence in the economy rose only slightly in October from September, according to a monthly survey, as they continue to grapple with job worries.
The weak outlook comes in the face of a rebounding stock market and underscores challenges retailers face as they prepare for the holiday shopping season, which is expected to see only modest gains from a year ago.
The confidence report and another report that showed a drop in home prices helped send stocks lower in early trading.
The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index rose to 50.2 from a revised 48.6 in September. Economists surveyed by Thomson Reuters expected a reading of 49.2.
September's index marked its lowest since February and was sharply down from 53.2 in August.
It takes a reading of 90 to indicate a healthy economy, a level not approached since the recession began in December 2007. Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound.
The index, which measures how shoppers feel about business conditions, the job market and the next six months, had been recovering fitfully since hitting an all-time low of 25.3 in February 2009.
The Dow Jones Industrial Average was down 26 points, or 0.2 percent in early trading Tuesday, at 11,138, after rising yesterday to its highest close since late April. For the year, the Dow is up 7.1 percent.
But while the stock market has been on an upward path, confidence has been moving sideways. In October 2009, the Consumer Confidence index stood at 48.7. Since then, it has mostly hovered in a tight range between the mid-40s and the high 50s. May 2010 proved to be the only exception at 62.7, but even that is weak.
One component of the index, which measures how shoppers feel now about the economy, increased slightly to 23.9 in October from 23.3.
The other measure, which assesses consumers' outlook over the next six months, improved to 67.8 from 65.5.
"Consumer confidence ... is still hovering at historically low levels," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "Consumers continue to be quite concerned about the short-term outlook. Both present and future indicators point toward more of the same in the coming months."
While fears have eased that the economy isn't heading toward a double-dip recession, companies aren't making a lot of job offers. In fact, in September, unemployment remained stuck at 9.6 percent, but the Labor Department's job report also showed a net loss of 95,000 jobs because of rampant layoffs of teachers and other local government workers that offset hiring in the private sector.
Meanwhile, the outlook for the housing is growing grimmer. A key housing price index showed Tuesday that home prices are weakening around the country, even in metro areas that were showing strength earlier in the year.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday fell 0.2 percent in August from July. Fifteen of the cities showed monthly price declines. Prices are expected to drop further in the coming months.
In another report, released Monday, The National Association of Realtors said sales of previously occupied homes rose 10 percent last month. However, sales remain extremely weak compared with where they were just a year ago.
The Conference Board survey, based on a random survey mailed to 5,000 households from Oct. 1 to Oct. 19, showed shoppers' continued worries about jobs. Those claiming jobs are "hard to get" rose to 46.1 percent from 45.8 percent, while those stating jobs are "plentiful" decreased to 3.5 percent to 3.8 percent.
Consumers were mixed about future job prospects. The percentage of consumers anticipating fewer jobs in the months ahead declined to 22.0 percent from 22.6 percent. However the percentage anticipating more jobs declined to 14.1 percent from 14.5 percent.
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