U.S. Consumer Confidence Sinks to All-Time Low

The Conference Board's U.S. consumer confidence index fell to an all-time low of 38.0 in December, following November's downwardly revised 44.7 level and the previous record low of 38.8 reached in October. Economists had expected the survey to rise to 45.5 in December.

The decline was due solely to the present situation component, which fell to 29.4 from 42.3 in November, while the expectations component fell to 43.8 from 46.2 in November.

"There is no other way to slice it, this report is extremely weak," said Ian Pollick, economics strategist at TD Securities. He said the U.S. consumer is being "hit from all sides" with wealth destruction from the collapse in equity markets, housing markets and the shaky employment situation.

ISM Chicago Business Barometer

The ISM Chicago Business Barometer, a survey of the manufacturing and services industries in the Midwest, remained in a state of rapid contraction in December, though sentiment improved slightly from the previous month's 26-year low. The index rose moderately to 34.1 from November's reading of 33.8, just ahead of consensus expectations of a 33.0 reading.

A reading below 50 indicates overall contraction in the region, and the survey has now reported sub-40 levels for three straight months, suggesting that the Midwest experienced a protracted slowdown in the final quarter of the year. The December figure contrasts starkly with the 56.7 level recorded in the final month of the third quarter.

In a press release accompanying the report, spokesman Jack Bishop said the index "reinforced the observation that this recession is not only deep, but also is broadly based."

U.S. Home Prices Down 18% from Last Year, Case-Shiller Report Says

U.S. house prices in November are down 18% compared to a year ago, according to the S&P Case-Shiller U.S. home price index, with the 20-city composite index falling to a reading of 158.16. Economists had expected the index to post a year-over-year decline of 17.9% in November. September's reading of 161.56, which was the lowest level since May 2004, was revised down marginally to 161.65. The Case-Shiller index has fallen every month since peaking in July 2006. The U.S. Composite-20 Index fell 2.16% in the month, with San Diego leading the way with a 3.05% decline.

Fed to Purchase $500 Billion in Mortgage-Backed Securities

The Federal Reserve announced plans to buy $500 billion in mortgage-backed securities in the first six months of 2009. The purchases will be limited to fixed-rate securities. Four investment firms have been selected to head the program: BlackRock, Goldman Sachs, Pimco, and Wellington. "Only fixed-rate agency mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae are eligible assets for the program," the Fed said.

GM Receives $6 Billion More in Government Aid

General Motors' financing company, GMAC LCC, was promised $5 billion in support from the U.S. Treasury as part of the government's latest efforts to save the beleaguered auto industry. The second part of the plan involves General Motors itself, which will receive $1 billion from the Troubled Asset Relief Program (TARP), on top of the $17.4 billion promised by the U.S. government on Dec. 19 to GM and Chrysler.

On Tuesday morning, GMAC pledged to resume its auto financing operations immediately, promising to modify its criteria to include retail financing for customers with credit scores of 621 or above.

Weakest Holiday Season for Retail Sales in 38 Years

The U.S. recession and adverse weather resulted in the weakest holiday shopping season since at least 1970, according to a weekly report from the International Council of Shopping Centers and Goldman Sachs. The report, which examines 75 retail chain stores in the U.S., excluding restaurants and vehicle demand, found that sales were down 1.8% compared to last year. Hopes for a surge of last-minute shoppers also appear to have been false, as sales were down 1.5% compared to the previous week.

Meanwhile, the Johnson Redbook retail survey, which covers 9,000 retail units, recorded a 0.4% decline in the week compared to the same period last year. In addition, sales to date in December fell back 0.5% compared to November.

Kansas Manufacturing Weakens for Fourth Straight Month

Manufacturing activity in the Kansas City Federal Reserve district continued to struggle in December, though the negative reading was a slight improvement compared to November. "Among both durable and nondurable goods producers, production fell at fewer plants than in November," said the central bank report. In December, all components were below 0, indicating contraction at all levels.

Overnight Releases

German inflation came in at 1.1% in the 12 months to December, according to preliminary estimates from the Federal Statistical Office (Destatis). Expectations had been for the consumer price index to rise 1.2% annually, following November's 1.4% growth rate. On a monthly basis, the CPI rebounded 0.3% in December after falling 0.5% previously, down from the 0.4% rise expected, Destatis added.

By Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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