NEW YORK (CNN/Money) - U.S. consumer confidence was hurt in June by a parade of scandals in Corporate America, a weak job market and more, a private research firm said Tuesday, though it still seemed strong enough to keep the economy afloat.
And a separate report showed sales of existing homes stayed near record levels, indicating that a red-hot housing sector will continue to provide some comfort to worried consumers.
The Conference Board said its index of consumer confidence, based on a survey of 5,000 households, fell to 106.4 in June from a revised 110.3 in May.
It was the lowest reading since 95.0 in February. Economists surveyed by Briefing.com expected a reading of 106.
The firm's Present Situation Index, which measures consumers' attitudes about the present state of the economy, fell to 105.7 from 111.2, while the Expectations Index, measuring hopes or fears about the future, dipped to 106.9 from 109.7 in May.
And only 20.1 percent of the people surveyed said they expected more jobs to be available in the next six months, compared with 21.2 percent in May.
"Weak labor market conditions, generally soft business conditions and waning public confidence in questionable business practices have helped erode consumer confidence," Lynn Franco, director of the firm's Consumer Research Center, said in a note. "Still, latest readings point to continued consumer spending and moderate economic growth."
Separately, the National Association of Realtors said existing home sales fell 0.3 percent to an annual rate of 5.75 million units in May, the fourth-fastest pace since the NAR started keeping track in 1968, from 5.77 million units in April. Economists surveyed by Briefing.com expected sales at a rate of 5.7 million units.
"So far this year, we've already recorded the four highest monthly sales rates on record for existing-home sales, but the pace can't stay at unprecedented levels indefinitely," NAR chief economist David Lereah said in a note. "What this means is that housing is continuing to be a significant factor in sustaining the U.S. economy.
"Going forward, the trend should be a gradual decline in home sales activity, but they'll stay above last year's record," Lereah added.
U.S. stock prices were higher most of the day, but surrendered gains and moved lower in the afternoon. Treasury bond prices also fell.
Tuesday's reports came as Federal Reserve policy makers began a two-day meeting to discuss their target for short-term interest rates. The Fed is widely expected to leave rates alone, as it has all year, because of the uncertain health of the economy.
Though consumer confidence data are somewhat volatile, their direction can help policy makers form a guess about how consumers will spend in the future. Consumer spending is critical, since it makes up about two-thirds of the U.S. economy.
Consumers' strength in the face of recession, terror attacks, falling stock prices and mounting job cuts helped make a recession that began in March 2001 one of the shortest and mildest in history.
"Weaker consumer confidence threatens to reverse the course of the recovery," said Anthony Chan, chief economist at Banc One Investment Advisors. "That's why policy makers will be so cautious. They don't really have to worry about the economy's fundamentals, but they do have to worry about confidence."
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Low mortgage rates have helped spending indirectly, by spurring demand for houses, a major source of wealth for many Americans. Higher home prices made many consumers feel richer despite the pitiful performance of the stock market this year, and a wave of mortgage refinancing put more cash in their pockets.
Mortgage rates remain low, as does the supply of available housing, meaning most economists doubt home prices are likely to fall off the table anytime soon, continuing to be a source of stability for consumers, who learn almost daily of scandals at Enron Corp., Global Crossing Ltd., Tyco International Ltd. (TYC: down $0.25 to $14.05, Research, Estimates) and more.
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