Consumer confidence drops sharply in August

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The Conference Board Consumer Confidence Index plummeted in August after a slight improvement in July.

The index now stands at 44.5, down from 59.2 in July. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

“A contributing factor may have been the debt ceiling discussions, since the decline in confidence was well under way before the S&P downgrade,” Franco added. “Consumers' assessment of current conditions, on the other hand, posted only a modest decline, as employment conditions continue to suppress confidence.”

Consumers' appraisal of present-day conditions weakened further in August. Consumers who say business conditions are “bad” increased to 40.6 percent from 38.7 percent; those who say business conditions are “good” inched up to 13.7 percent from 13.5 percent.

Consumers' assessment of employment conditions was more pessimistic than last month. Those who say jobs are “hard to get” increased to 49.1 percent from 44.8 percent; those who say jobs are “plentiful” declined to 4.7 percent from 5.1 percent.