Consumer confidence index drops in August

NEW YORK (AP) _ Consumer confidence weakened in August as volatile financial markets and housing problems took a toll, a private research group said Tuesday. <br/><br/>The New York-based Conference Board

Tuesday, August 28th 2007, 9:51 am

By: News On 6

NEW YORK (AP) _ Consumer confidence weakened in August as volatile financial markets and housing problems took a toll, a private research group said Tuesday.

The New York-based Conference Board said that its Consumer Confidence Index, declined to 105.0, from a revised reading of 111.9 in July.

Although the index was down, it was slightly stronger than the 104.5 that Wall Street analysts expected.

``A softening in business conditions and labor market conditions has curbed consumers' confidence this month,'' said Lynn Franco, director of The Conference Board Consumer Research Center. ``In addition, the volatility in financial markets and continued subprime housing woes may have played a role in dampening consumers' spirits.''

July's reading was revised from an earlier level of 112.6, which the Conference Board said was the highest in six years.

The survey is closely watched because consumer spending represents two-thirds of the U.S. economy and confidence levels tend to influence spending.

A separate report released Tuesday said U.S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since Standard & Poor's began its nationwide housing index in 1987.

MacroMarkets LLC Chief Economist Robert Shiller, an architect of that report, said the declining residential real estate market ``shows no signs of slowing down.''

The consumer confidence survey from the Conference Board is based on a representative sample of 5,000 U.S. households to measure consumer sentiment on present economic conditions and the spending outlook for the next six months. The index was based at 100 in 1985.

The Present Situation index, which measures how shoppers feel now about economic conditions, decreased to 130.3 in August from 138.3 in July.

The Expectations Index, which measures shoppers' outlook for the next six months, fell to 88.2 from 94.4.

Consumers' assessment of the labor market only weakened slighty. Those saying jobs are ``hard to get'' increased to 19.7 percent in August from 18.7 percent. Those saying jobs are plentiful fell to 27.5 percent from 30.0 percent in July and those saying jobs are not so plentiful rose to 52.8 percent from 51.3 percent.