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Consumer confidence plummets to lowest level since 2009

Debt ceiling concerns likely factor in decline

Consumer confidence plunged nearly 15 points in August to its lowest level since 2009, The Conference Board reported Tuesday.

The research organization's Consumer Confidence Index fell to 44.5 in August from 59.2 in July (1985=100). The Present Situation Index decreased to 33.3 from 35.7 while the Expectations Index plummeted to 51.9 from 74.9 in July.

"Consumer confidence deteriorated sharply in August as consumers grew significantly more pessimistic about the short-term outlook," said Lynn Franco, director of The Conference Board Consumer Research Center. "The index is now at its lowest level in more than two years (April 2009, 40.8).

"A contributing factor may have been the debt ceiling discussions since the decline in confidence was well under way before the S&P downgrade (of the U.S. government's credit rating). Consumers' assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence," she said.

The monthly index is based on a survey conducted for The Conference Board by The Nielsen Co. The cutoff date for the preliminary results was Aug. 18.

Consumers' appraisal of present-day conditions weakened further in August, the survey indicated.

Consumers claiming business conditions are "bad" increased to 40.6% from 38.7%, while those claiming business conditions are "good" inched up to 13.7% from 13.5%. Consumers' assessment of employment conditions was more pessimistic than last month. Those claiming jobs are "hard to get" increased to 49.1% from 44.8%, while those stating jobs are "plentiful" declined to 4.7% from 5.1%.

Consumers' short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8% from 17.9%, while those expecting business conditions to worsen surged to 24.6% from 16.1%.

Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4% from 16.9%, while those expecting fewer jobs increased to 31.5% from 22.2%. The proportion of consumers anticipating an increase in their incomes declined to 14.3% from 15.9%.

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