The confidence of US consumers in the country’s economy fell sharply in August and reached its lowest level since April 2009, The Conference Board reported on Tuesday, attributing the decline in part to the lengthy congressional negotiations to raise the debt limit.
The Board’s Consumer Confidence Index plunged this month to 44.5 points, compared to its level of 59.2 in July, when it had experienced a slight improvement after two consecutive months of decline.
Index readings were usually in the 90s during the economic expansion that ended in December 2007.
One factor in this month’s fall “may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade (of US sovereign debt),” Lynn Franco, director of The Conference Board Consumer Research Centre said in a press release.
“Consumers grew significantly more pessimistic about the short-term outlook,” Franco said.
The Expectations Index, based on respondents’ views of how the economy will be doing in six months, plunged to 51.9 in early August from 74.9 last month.
The Present Situation Index registered a smaller drop, from 35.7 to 33.3, though Franco noted that “employment conditions continue to suppress confidence”.