U.S. consumer confidence crumbled in August to its lowest level in more than two years as the fallout from political wrangling over a budget deal took its toll, according to a private sector report released Tuesday.
The Conference Board, an industry group, said its index of consumer attitudes sank to 44.5 from a downwardly revised 59.2 the month before. The index was well off a poll of economists by Reuters for a reading of 52.0. The index was at the lowest level since April 2009, the report said. July was originally reported as 59.5.
Consumers’ outlook also deteriorated sharply as the expectations index plunged to 51.9 from 74.9. The assessment of consumers’ present situation fared better with the index slipping to 33.3 from 35.7.
Consumers have faced many hurdles recently, including the debate surrounding the debt ceiling, the downgrade of the U.S. credit rating by Standard & Poor’, volatility in financial markets and increased fears the economy is heading for another recession.
“A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
Consumers’ labor market assessment also worsened. The number of respondents saying they found “jobs hard to get” rose to 49.1 percent from 44.8 percent the month before, while the “jobs plentiful” category fell to 4.7 percent from 5.1 percent.
The view on prices increases was unchanged with expectations for inflation in the coming 12 months holding steady at 5.8 percent.