Meanwhile, in an  economy far, far away, and in an economic cycle about 12 months ahead of us, consumer confidence continues its fall off the edge of a cliff, and a leading index for tracking the housing market fell by 14 per cent from peak.

There are several consumer confidence indices covering the US, but the index published by the Conference Board is our preferred measure, and yesterday its latest reading was out.

This time, the index was down to 62.3, the lowest reading since the invasion of Iraq in 2003. To put a score of 62.3 in context, in July last year it hit 111 points.

Lynn Franco, Director of The Conference Board Consumer Research Center said, “This month’s decline in Consumer Confidence was the result of yet another sharp decline in the Present Situation Index. This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further. And, not only are lacklustre business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns. Consumers’ inflation expectations continue to rise and this measure now matches the all-time high reached in the aftermath of Hurricane Katrina. The percentage of respondents intending to take a vacation over the next six months has fallen to a 30-year low, another sign of consumers turning more cost conscious. Looking ahead, consumers’ outlook for the economy, the job market and their income prospects remains quite pessimistic and little changed from last month. Or, in other words, the glass remains half empty.”

Meanwhile, the closely-watched Case Shiller index from Standard & Poor’s for tracking US house prices, fell again.

The 10-City Composite index posted a new record low annual decline of 13.6 per cent, and the 20-City Composite recorded an annual decline of 12.7 per cent.  More to the point, the 20-City composite Index is now 15 per cent down from the peak set in July 2006.

There is no sign of a bottom in the numbers, says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.

It seems that US house prices, and in their wake consumer confidence, are in freefall.

Bear in mind the following.  Consumer confidence only started to fall almost 12 months after the Case Shiller index peaked and went into decline.  If the UK follows a similar pattern, then don’t expect significant falls in UK consumer confidence for a while.

Bear in mind also that there are many parallels between the US housing market a year ago, and the UK market today.  This may be a coincidence but, on the other hand, it is possible that what is occurring in the US now, is a taster of what will happen in the UK next year.

Never forget, average UK house prices are much higher than average US house prices.

© Investment & Business News 2013