- NEW YORK (Reuters) - U.S.
consumer confidence fell sharply in August as Americans rated current economic
conditions as the worst in nearly eight years, according to a report on
Tuesday that suggested consumer spending could grow sluggishly in coming
months.
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- The Conference Board, a business-backed research group,
said its index of consumer attitudes fell to 93.5 in August -- its lowest
level since November 2001 -- from 97.4 in July. Analysts had expected the
index to come in at 97.0. U.S. stocks and the dollar fell after the report
was released, while Treasuries cut their losses.
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- The decline in confidence was driven by a plunge in the
current conditions index to its lowest level since October 1994 at 92.0,
down from 99.4 in July.
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- "Consumer spending is not likely to gain momentum
any time soon," said Lynn Franco, director of the Conference Board's
Consumer Research Center. But she said the current level of consumer expectations
is consistent with "a continued, but slow, economic expansion."
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- The expectations index, a gauge of consumers' six-month
outlook, fell to 94.5 in August from 96.1 in July. The survey found that
the number of respondents saying that jobs were hard to get was unchanged
at 23.9 percent, indicating that the labor market has yet to improve during
the economy's uneven recovery.
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- Economists have worried that falling confidence could
cause consumers to retrench on spending and tip the economy back into recession.
But in recent months, consumers have continued to spend freely, with autos
sales robust in July and new home sales hitting a record.
-
- Already in August, sales at retail chain stores have
stagnated despite the start of back-to-school shopping. But auto sales
have remained strong with zero-percent financing and other incentives luring
consumers, while low mortgage rates have kept fueling a boom in housing.
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- "We are seeing some softish chain store sales of
late that provides an indication that a mix of job insecurity and equity
weakness are tending to weigh on the consumer," said Alan Ruskin,
research director at 4Cast Ltd.
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- The Conference Board, a New York-based business-financed
research group, surveys 5,000 households by mail to compile its monthly
report. Earlier this month the University of Michigan's preliminary index
of consumer sentiment stabilized in August as a stock market recovery made
Americans feel more upbeat about their current finances.
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