By Courtney Schlisserman Dec. 29 (Bloomberg) -- Confidence among U.S. consumers rose in December for a second month as pessimism over the outlook for jobs diminished. The Conference Board’s confidence index increased to 52.9, in line with the median forecast of economists surveyed by Bloomberg News, from 50.6 in November, the New York-based research group said today. Another report showed home prices climbed in October for a fifth consecutive month. The report showed consumer attitudes about current conditions decreased to the lowest level in 26 years and expectations over wages also fell, a reminder that spending may be slow to recover with government assistance. A jobless rate that is forecast to exceed 10 percent through the first half of next year may prompt policy makers and retailers to maintain tax breaks and incentives to entice buyers. “Confidence is slowly climbing out of the cellar,” Ryan Sweet, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The consumer remains very focused on necessities, and spending has been very focused on subsidies and discounting. Consumers are still nervous about their jobs and future income.” Economists surveyed by Bloomberg News forecast the confidence measure would increase to 53, according to the median of 64 projections, from a previously reported 49.5 in November. Estimates ranged from 46 to 56.5. The group’s index averaged 58 in 2008 and 103.4 in 2007. Home Prices The S&P/Case-Shiller home-price index increased 0.4 percent in October from the prior month on a seasonally adjusted basis, the group said today in New York. The gauge was down 7.3 percent from October 2008, the smallest year-over-year decline since October 2007. Compared with the prior month, 11 of the 20 areas covered showed an increase on a seasonally adjusted basis while eight had a decline. The biggest month-to-month gain was in San Francisco, which rose 1.7 percent. The Conference Board’s measure of present conditions decreased to 18.8, the lowest level since February 1983, from 21.2 the prior month. The share of consumers who said jobs are plentiful fell to 2.9 percent from 3.1 percent, according to the Conference Board. The proportion of people who said jobs are hard to get decreased to 48.6 percent from 49.2 percent. Brighter Outlook The gauge of expectations for the next six months climbed to 75.6, the highest since the recession began two years ago, from 70.3 the prior month. The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 10.9 percent. The share expecting more jobs improved to 16.2 percent from 15.8 percent. The U.S. lost the fewest number of jobs in November since the recession began, according to Labor Department data. Also, jobless claims have receded, with the number of first-time applicants reaching the lowest level in more than a year in the week ended Dec. 18. Regarding incomes, “consumers remain rather pessimistic about their short-term prospects and this will likely continue to play a key role in spending decisions in early 2010,” Lynn Franco, director of the Conference Board’s Consumer Research Center, said in a statement. Recovery Into 2010 The world’s largest economy will expand 2.6 percent in 2010 after shrinking 2.5 percent this year, according to the median forecast of 58 economists surveyed by Bloomberg from Dec. 1 to Dec. 8. Consumer spending, which accounts for about 70 percent of the economy, will grow 1.8 percent next year after declining 0.6 percent in 2009, the worst performance in 35 years, according to the survey median. Federal Reserve officials two weeks ago declared financial markets healthy enough to remove most emergency aid. At the same time kept a pledge to keep interest rates “exceptionally low” for an “extended period.” “Deterioration in the labor market is abating,” the FOMC said in a statement Dec. 16 after meeting in Washington. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.” Retail sales rose an estimated 3.6 percent this holiday seasons from a year earlier, data from MasterCard Advisors’ SpendingPulse showed yesterday. The estimate for Nov. 1 to Dec. 24 excludes automotive and gasoline sales, the company said. Retailers are extending discounts beyond Christmas to lure customers. ‘Very Aggressive’ “We are going to be very aggressive, we’ve been aggressive all season,” Toys “R” Us Chief Executive Officer Jerry Storch said by telephone Dec. 23 from Wayne, New Jersey, where the largest U.S. toy chain is based. Buying plans for automobiles and real estate dropped this month, today’s Conference Board report showed. Home-buying expectations fell to the lowest level since 1982. “It’s clear that consumer concerns about unemployment levels and the economic climate are weighing on spending,” Walgreen Co. Chief Executive Officer Gregory Wasson said on a conference call with analysts Dec. 21. “Consumers are focused on value and discretionary items are not high on their shopping lists.” To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net

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