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Consumer Confidence Plunges

Consumer confidence fell in August to its lowest level in nine months as nagging worries about the economy kept anxiety high, according to a report that suggested consumer spending would grow sluggishly in coming months.

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.

Economists closely watch confidence for trends in consumer spending, which drives two-thirds of the economy. In recent months, consumers have spent freely despite their mounting fears. Even with July's confidence plunge, autos sales were robust for the month and new home sales hit a record.

The present situation index fell in August to 92.0 from 99.4 in July. The expectations index, a gauge of consumers' six-month outlook, fell to 94.5 in August from 96.1 in July. The index compares results to its base year, 1985, when it stood at 100.

Lynn Franco, director of The Conference Board's Consumer Research Center, called August's decline "a strong signal that business conditions have yet to turn around. It also suggests that consumer spending is not likely to gain momentum any time soon."

From a historical context, the August index is at a level that points "to a continued, but slow, economic expansion," the Conference Board said.

The report showed no improvement in consumers' confidence about current economic conditions.

According to The Conference Board, the number of consumers rating current conditions as "good" fell from 20.2 percent in July to 16.6 percent, while the number sizing up the conditions as "bad" was virtually unchanged at 22.3 percent in August, compared to 22.1 percent in July.

There was also some good news on the economy: Orders to U.S. factories for big-ticket goods, including cars and computers, jumped by 8.7 percent in July, the largest increase in nine months.

The rebound reported by the Commerce Department came after orders for costly manufactured "durable" goods dropped by 4.5 percent in June from the month before. That decline had raised fears that consumers and businesses might be starting to seriously rein in their spending, something that would further slow economic growth.

The 8.7 percent increase in orders for durable goods items expected to last at least three years was the largest since a 9.2 percent advance in October. July's performance was far stronger than what analysts were predicting. Their forecasts ranged from a 1.4 percent advance to a 2.7 percent gain.