Tom Murphy
RedwoodAge.com

What do boomers really want this holiday season? A little stability for their retirement nest eggs would be nice. 

But don't count on it, despite any flashy stock rallies. A late-Fall flurry of economic data shows consumers crying "humbug," and with good reason. 

Home prices fell 4.5 percent in the third quarter compared to a year earlier, according to Standard & Poor's, marking the steepest plunge since the index started two decades ago. That puts the squeeze on the major asset of many Americans who are drifting to retirement.

That trend, along with rising energy costs and falling stocks, set the Consumer Confidence Index tumbling in November, dropping nearly 8 points to 87.3 - its lowest reading since October 2005 when the country was still reeling from the New Orleans hurricanes. It was also the sharpest drop since September 2005, when Katrina knocked 18 points off the closely watched index.

"Consumers' apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter," said Lynn Franco, director of The Conference Board Consumer Research Center.

The board also reported its index of shopper attitudes fell to 115.4 from 118.0 a month earlier, and its "expectations" index - which measures consumer sentiment over the coming six months - slid all the way to 68.7 from 80.0.

Energy Prices
There was good news, if you can call it that, about energy prices. Oil prices fell about $3 dollars to $94.63. But that was only because the outlook for the US economy looks so bleak that investors expect the demand for oil to drop. Besides, that decline was offset by news that the national average price for a gallon of gas has again risen to over $3 a gallon. 

Home heating fuel isn't far behind at a time when oil-heated homes in northern states have to fill their tanks for the long, cold winter. An average homeowner may spend $2,000 to $3,000 on heating oil in regions like New England this year.

Some analysts think oil has peaked, thanks to the huge problems facing the US economy. "I think this is it," Phil Flynn, an analyst at Alaron Trading Corp., told the AP. "There should be some concern about some slowdown in the economy."

Damn the torpedos! After sinking on Monday, stocks sailed ahead Tuesday and Wednesday, with the Dow gaining more than 550 points. But that's less than half of what it lost over the past six weeks.

Supporting the market was news that the Abu Dhabi Investment Authority was investing $7.5 billion in Citigroup, which has suffered huge losses amid continuing concern over the mortgage market.

Buyers Market
Sales of existing homes fell in 46 states during the third quarter, which may help explain a 1.7 percent drop in prices from the quarter before, as reported by S&P. 

A separate S&P index covering 20 urban areas showed a 4.9 percent drop in prices from a year earlier with only five cities - Atlanta, Charlotte, Dallas, Portland and Seattle - posting slowing gains. The hardest hit cities were Tampa (11.1 percent), Miami (10 percent), San Diego (9.6 percent), Detroit (9.6 percent), Las Vegas (9 percent), Phoenix (8.8 percent), and Los Angeles (7 percent). 

There may be a hidden treasure there for baby boomers. With the exception of the Motor City, all those towns are in the sunbelt where millions of soon-to-be retired folks are likely to move over the next decade. 

Meanwhile, a report compiled by Global Insight for the US Conference of Mayors offered a somber warning for the future, saying rising foreclosures will translate to a loss of billions of dollars in economic activity in American cities over the next year.

"The wave of foreclosures that has rippled across the US has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods," the report said. "And it's not over yet."

New York, for example, could lose $10.4 billion in spending in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion a piece, and Chicago at $3.9 billion.