By Burton Frierson
NEW YORK (Reuters) - U.S. consumer confidence slumped to its worst in five years this month as a tough job market helped produce the grimmest future outlook in 17 years, while soaring inflation among producers at the year's start stoked fears of stagflation.
Bad news also poured in from the beleaguered housing market, other data showed on Tuesday. The collapse in U.S. home prices accelerated to a record pace in the fourth quarter of 2007, with prices plunging 8.9 percent last year, according to the S&P/Case-Shiller U.S. National Home Price Index.
A government report showed U.S. producer prices jumped 1 percent in January on rising energy costs and posted the biggest 12-month gain in more than 26 years, which was the last time the U.S. was emerging from a stagflationary period of low growth and high inflation.
The Conference Board said its index of consumer sentiment fell to 75.0 in February, significantly worse than economists' forecasts and its lowest in five years. The Conference Board's expectations index fell to 57.9 -- its lowest in 17 years.
"It looks like there is no confidence in an economy where inflation is getting out of control," said Andrew Brenner, market analyst at MF Global in New York.
"This is a classic stagflation scenario."
In a topsy-turvy trading session, U.S. stocks erased early losses and rose after tech giant IBM
The deterioration in sentiment was pronounced throughout the report.
It was the biggest monthly drop in the consumer confidence and expectations indexes since September 2005, following Hurricane Katrina. The present situation index saw its biggest tumble since October 2001, the last time the United States was in recession.
Sentiment suffered amid a worsening view of the jobs market. The measure of "jobs hard to get" rose to 23.8 in February -- its highest since October 2005 -- from 20.6 in January.
The measure of "jobs plentiful" fell to 20.6 -- its lowest since April 2005 -- from 23.8.
The proportion of respondents identifying jobs as plentiful fell by 3.2 percentage points, the biggest drop in a year and a half. The jobs hard to get response shot up by the most in nearly five years.
The 8.9 percent year-over-year decline in the S&P/Case-Shiller index was the largest in its 20-year history and came as housing was pressured lower by a huge supply of homes for sale, rising foreclosures and tighter lending conditions.
By comparison, during the 1990-91 housing recession the annual rate bottomed at a 2.8 percent drop.
A separate report added to the gloom in housing, which has been a key source of troubles in the economy and financial markets.
The Office of Federal Housing Enterprise Oversight said U.S. home prices posted a second consecutive quarterly drop in the fourth quarter, with every state except Maine recording lower prices.
The housing finance company regulator said that compared with the third quarter of 2007, house prices fell by 1.3 percent.
(Reporting by Burton Frierson; Additional reporting by Julie Haviv in New York and Mark Felsenthal and Patrick Rucker in Washington, Editing by Andrea Ricci)
