U.S. consumer confidence fell sharply in August, the Conference Board said Tuesday (Aug. 29).
CBS MarketWatch reported that the consumer confidence index fell to 99.6 in August from a revised 107.0 in July. This is the sharpest drop since Hurricane Katrina battered the Gulf Coast.
The index is at its lowest level since last November, when confidence was recovering from the hurricanes.
The fall in August was sharper than expected. Economists expected the index to drop to 102.7 from the initial estimate of 106.5 in July.
“Less favorable business conditions coupled with a less favorable job scenario” were the driving forces for the confidence drop, said Lynn Franco, director of the Conference Board Consumer Research Center.
“Looking ahead, the glass remains half empty as consumers are growing increasingly pessimistic about the short-term outlook,” Franco said.
The present situation index fell to 123.4 from 134.2, while the expectations index slipped to 83.8 from 88.9.
The decline in confidence came despite a drop in gasoline prices in the month. Gas prices are down 11 cents since Aug. 1.
Consumers’ overall assessment of the economy was significantly less favorable in August. Those claiming conditions are “good” fell to 26.1% from 27.3%. Those claiming conditions are “bad” rose to 16.7% from 15%.
The outlook for the labor market was also less favorable.
Consumers saying jobs are “plentiful” fell to 24.4% from 28.6%. Those claiming jobs are “hard to get” increased to 21.1% from 19.6% in the previous month.
Inflation expectations over the next 12 months rose to 5.5% in August from 5.1% in July. This is the highest level since last October.