Consumer confidence index hits 5-month low as costs skyrocket; expectations at 2-year low.

April 26, 2005: 10:16 AM EDT

NEW YORK (Reuters) - Consumer confidence deteriorated in April to its lowest in five months as higher gasoline prices left Americans uncertain about their economic prospects, a report said Tuesday.

As gasoline costs sky-rocketed, The Conference Board said its gauge of sentiment dropped to 97.7, from a revised 103.0 in March and roughly in line with Wall Street forecasts.
Consumer spending is the backbone of the U.S. economy, accounting for two-thirds of activity, so worsening confidence is tracked as a possible precursor to softer growth.
In recent years, however, the correlation between confidence and actual retail sales has weakened, with consumers purchasing cars and homes even as they tell surveys that things are getting worse. Indeed, buying intentions of things like major appliances actually increased, according to the data.
The research group's expectations index measure declined to 87.2, its lowest in nearly two
years, from 93.7. The present situation reading declined to 113.6 from 117.0.
News on the labor market was mixed. The proportion of consumers saying jobs were "hard to get" eased, but so did the number of those who thought jobs would become more plentiful in coming months.

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