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Record Drop for US Home Prices, Consumer Confidence

A struggling U.S. economy is not getting any help from the battered housing market.

A closely watched index Tuesday shows home prices in 20 major U.S. cities plunged a record 18 percent in October compared to the same time last year.

U.S. home prices have now fallen to levels not seen since March 2004.

Some economists say the troubled U.S. housing market is at the center of the country's economic woes, and warn the U.S. will not be able to pull out of a recession until the market recovers.

Meanwhile, discounted prices on everything from clothes to electronics are doing little to spark sales or boost consumer confidence.

An industry trade group, the International Council of Shopping Centers, says Tuesday sales for the week ending December 27 fell almost two percent compared to last year. The report issued with Goldman Sachs also notes a 1.5 percent drop from the week before.

A private research group, the Conference Board, says Tuesday its index of U.S. consumer confidence hit an all-time low in December.

The sales data supports the conclusions of a series of other reports that found U.S. sales plunged in the critical weeks leading up to the Christmas holiday (December 25). U.S. stores depend on sales during this period to make a profit for the year.

President-elect Barack Obama's economic team is considering a plan costing up to $775 billion to help spur the economy, and that plan is getting support from the International Monetary Fund.

IMF chief economist Olivier Blanchard says the package is on the right track and that its size corresponds to "what we [the IMF] think is needed."

He also says the stimulus package should be aimed at consumers who want to spend money but who are having trouble getting credit. He says other consumers are more likely to save money, which will not help spur an economic recovery.

Also Tuesday, South Korea announced a 14 percent drop in industrial production in November from the same period last year, the biggest yearly decline on record. Officials blamed this on slowing demand for exports, including cars, computer chips and televisions.

Some information for this report was provided by AFP, AP and Reuters.