Consumer Confidence Dips

Consumer confidence declined in July, after eight months of consecutive gains pushed it to a 30-year high, the Conference Board reported Tuesday.

The private business group's index of consumer confidence, which measures consumers' propensity to spend, declined 3.5 points to 135.6, from 139.0 in June.

Lynn Franco, associate director of the board's consumer research center, said the dip in confidence may reflect concerns about higher interest rates, tighter credit and less rosy job prospects. In a pre-emptive strike against inflation, Federal Reserve policy-makers increased interest rates modestly in June.

Fed Chairman Alan Greenspan signaled last week that the Fed is ready to nudge rates even higher if the economy shows signs of overheating, something that has sent stock averages retreating from all-time highs. Today's report was an indicator the Fed's move may have cooled sentiment.

But, Franco said the decline in the confidence index in July "does not suggest a long-term erosion in consumer optimism," saying that, "like the stock market, even today's gung-ho consumers need resting periods."

The Conference Board's expectations index, which measures confidence in the economy's future, declined to 107.0 in July from 114.9 in June. However, the group's "present situation index," which measures current confidence, rose to 178.7 from 175.0.

Written By PATRICIA LAMIELL, AP Business Writer