CONSUMER confidence unexpectedly dropped to its lowest level in two-and-a-half years last month, while house prices were unchanged at low levels in August, suggesting the consumer is still struggling.

    Taken along with recent regional manufacturing data that hinted at stabilization in the sector this month, Tuesday’s U.S. data underscored the view that the economy should avoid another recession, although growth will be slow.

    Confirmation of a growing but sluggish U.S. economy is expected from U.S. GDP data for the third quarter today, but the surprising drop in consumer confidence suggests the recent bounce back from a weak first half year may not be sustained.

    Consumer attitudes have soured since the spring, hit by fears of a renewed recession, political gridlock, high unemployment and volatility in the stock market. With consumer spending accounting for about 70 percent of the economy, economists say the recovery will be hard pressed to make significant headway until confidence improves.

    Analysts said the weaker-than-expected home price data was disappointing but not shocking as the market struggles to get out from under a glut of unsold homes and ongoing foreclosures that are holding prices down. The struggling housing market continues to be one of the biggest hurdles for the economic recovery as attempts to bolster the sector have had limited success.

    In the latest efforts, the Obama administration said Monday it would expand a mortgage refinancing program in a step that could help up to a million borrowers. (SD-Agencies)