Americans' faith in the U.S. economy tumbled in August to a 9-month low, which could translate to tightened purse strings if job growth stumbles or fuel costs rebound.
Job-related worries were the big reason consumer confidence fell more than expected this month to its lowest level since November. In July, unemployment rose to a 5-month high of 4.8 percent.
But analysts expect job creation and personal spending for August to come in higher in reports due later this week, and pump prices have fallen more than 5 percent over the past month—providing some relief in people's travel budgets.
Furthermore, consumers surveyed reported small increases in their plans to buy homes and major appliances, despite their dwindling confidence.
"What people say and what people do don't always correspond," said Stuart G. Hoffman, chief economist for the PNC Financial Services Group in Pittsburgh. "We don't know yet if this confidence number drop will hurt the back-to-school selling season."
The Conference Board, a New York-based research group, said its confidence index fell to a reading of 99.6, down from 107.0 in July. The index was lower than analysts' expectation of 102.5. The last time the index fell below 100 was in November, which saw a reading of 98.3.
There are still more consumers who feel business and labor conditions are favorable than unfavorable, but the gap is closing, economists noted.
"It confirms that the economy is slowing down, that things are cooling off a bit, and that consumers are little bit more concerned about the job situation than they were earlier this year," said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, MO.
He added that while consumer sentiment and consumer behavior don't correspond precisely, the sentiment index "can show potential changes in spending."
to Daily News