Conference Board Reports Steep Drop in Consumer Confidence

The index measures how Americans feel about business conditions, the job market and the next six months.

It has hovered in a tight range from the high 50s to low 60s over the past year, far below the 90 that indicates a healthy economy. The index hasn't approached that level since the recession began in December 2007.

A housing slump that isn't over and won't be for a while isn't helping.

Home prices are falling in most major U.S. cities, and the average prices in four of them are at their lowest in 11 years, according to Standard & Poor's/Case-Shiller report released Tuesday. On Friday, the Commerce Department said new-home sales plunged in February, the third month in a row.

The falling Consumer Confidence Index is in line with Gallup Poll's weekly surveys, which have registered a slide in confidence since mid-February.

"Consumers' inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions," Lynn Franco, director of The Conference BoardConsumer Research Center, said in a statement.

Signs of financial strain emerged Monday in February's consumer spending report, which showed that most of the 0.7 percent jump in spending went to cover higher gas prices.

The Conference Board survey, conducted by The Nielsen Co., is based on a random survey mailed to 3,000 households March 1-March 16.

Consumer reactions to overseas events like the Japanese earthquake are typically short-lived, Franco said. The quake hit Japan on March 11, five days before the end date of the survey.

What really affects confidence more is "what's happening in the home front," says Franco. Higher prices for necessities are "daily, constant reminders to consumers," she added. "There is a sort of diminished sense of purchasing power."