• by Thom Forbes  @tforbes, August 29, 2012

Normally, when you see an NBCNews.com headline such as “Home Prices Up For Fifth Straight Month,” the inclination is to rub the palms of your hands together in anticipated of a glut of consumer spending. Everybody wins, right? Movers and landscapers, bankers and insurance companies, the cable guy and newspaper deliverers (what’s left of them), the Home Depot and Bed, Bath & Beyond, marketing budgets and ad campaigns.

But today’s positive news is directly countered by a headline that makes you want to smack yourself upside the head: “Consumer Confidence Lowest In Nine Months.” 

What gives here?

The Conference Board says its index of consumer attitudes fell to 60.6, the lowest level since November 2011, from a downwardly revised 65.4 the month before, reports NBCNews.com. According to a Reuters poll, economists had expected an increase to 66.

"Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations," says Lynn Franco, director of The Conference Board Consumer Research Center. 

Home prices, meanwhile, rose more than expected in June -- 0.9% on a seasonally adjusted basis  -- according to the S&P/Case Shiller composite index of 20 metropolitan areas. That beat economists' forecasts for a 0.5% uptick, according to a Reuters poll. And if you don’t adjust for the season –- “80% of homes are sold in the summer; the other 20% spread out over he rest of the year,” 478-PETE the mover tells me -- prices were up 2.3%.

But reaction to the report has been “tempered,” Kathy Orton blogs in the Washington Post. She quotes Stan Humphries, chief economist at Zillow, who says: “While we have seen healthy appreciation for the past few months, we do expect declines in the Case-Shiller indices in the back half of this year, particularly as the overall monthly sales volume declines…. Overall, the period of sustained home value declines is behind us; however, due to high levels of negative equity and the associated scourge of foreclosures, we’re still a few years away from a normal housing market.”

But at least we’re trending in the right direction, says S&P spokesman David Blitzer in a story by U.S. News & World Report’s Meg Handley: “We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change. The market may have finally turned around."

Handley reports that only Charlotte, N.C., and Dallas, Tex., experienced a slowdown in their annual price appreciation rates.

And Bloomberg Businessweek’s Karen Weise writes that home prices might this year finally avoid the “‘Sisyphean slide,’ by which price decreases in the second half of the year erase any gains,” mainly due to the reduced number of borrowers who owe more than their home is worth. Citing CoreLogic research, Weise reports that there were 58,000 completed foreclosures in the U.S. in July, down from 69,000 a year ago. CoreLogic believes “demand will be sufficient to meet any increases in supply without hurting prices.” 

Patrick Newport, U.S. economist at IHS Global Insight, tells the AP’s Alex Veiga that rising sale prices are not only a boost to folks whose mortgages are underwater but also might “boost consumer spending if people feel wealthier” -- and consumer spending represents 70% of economic activity.

So why isn’t that happening, based on the Conference Board’s survey? 

“The consumer is still very cautious,” Jim O’Sullivan, chief U.S. economist for High Frequency Economics Ltd. tells Bloomberg’s Alex Kowalski. “The labor market is still relatively weak. There’s a lot of uncertainty about policy ahead of the election.” Fuel costs are also up, he points out. “Soaring,” in fact, according to the Miami Herald. They are up at our favorite fast fooderies, too. 

“Soaring Food Prices Put Restaurants In A Bind,” The Wall Street Journaltells us this morning. “Restaurant chains are in a pickle, caught between soaring ingredient costs and fears that raising prices will turn off their budget-conscious customers, who generally remain pessimistic about the economy,” writes Julie Jargon. So some are passing along the price increases; others are not. 

We’ll give the last quote to Robert Toll, chairman of Toll Brothers builders, whose observation during an analysts call last week is cited by the AP’s Veiga: “We do remain cautious in our optimism, as we believe consumer confidence remains fragile and subject to the impact of negative economic and political headlines.” 

In other words, that’s one sweet and sour pickle we’re in.