Consumer confidence hits 30-year low

Consumer confidence plummeted to the lowest level in more than 30 years amid a lack of job creation and tumultuous stock markets. 

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 54.9 last month from 63.7 in June, the lowest level since May 1980 and well below economists' expectations. 

The report runs counter to a Commerce Department report earlier Friday reflecting an increase in retail sales that shows better-than-expected consumer sentiment about the economy.  

Consumers picked up their spending in July as retail sales grew by the largest amount in four months, the Commerce Department said Friday. 

If the market ends up in positive territory on Friday, it will be the first time in more than a month that the market has registered gains for two straight days. Since July 22, the Dow has lost more than 1,400 points, with several back-to-back days of major gains and losses. 

The Michigan survey’s index of current conditions, which reflects consumers' perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, fell to 69.3 from 75.8 the prior month.

The index of consumer expectations for six months from now, which can project future consumer spending, decreased to 45.7 from 56 the prior month.

The Dow Jones Industrial Average gained more than 163 points into afternoon trading, while the Standard & Poor’s 500 Index and Nasdaq also remained in positive territory. 

Thursday produced positive news on the unemployment front, as initial jobless claims dropped below 400,000 for the first time since April, calming fears that the sagging economy is headed into another recession. 

Employers added 117,000 jobs in July as the unemployment rate fell to 9.1 percent while the economy grew 1.3 percent in the second quarter and only 0.8 percent for the first six months of the year. 

Consumer spending, which accounts for 70 percent of the economy, dropped in June for the first time in 20 months, another bad sign for the stagnating economy. 

In response to deepening economic troubles, Federal Reserve Chairman Ben Bernanke said the central bank will keep interest rates at or near zero through at least mid-2012.