U.S. consumer confidence fell by the sharpest amount in two years in August due to declining home prices and volatile financial markets, a private research group said Tuesday. The Conference Board said its consumer confidence index fell to 105.0 from 111.9 in July, which was a six-year high. August's reading was the lowest in a year. Although the index declined, it was slightly stronger than Wall Street expectations. “A softening in business conditions and labor-market conditions has curbed consumers' confidence this month,” Conference Board research director Lynn Franco said in a statement. “In addition, the volatility in financial markets and continued ‘sub-prime' housing woes may have played a role in dampening consumers' spirits.” The confidence decline was the steepest since just after Hurricane Katrina devastated the U.S. Gulf Coast in 2005, but the troubles affecting Americans' perceptions of the economy were man-made this time. The crisis that began in sub-prime mortgages-loans made to high-risk borrowers-has spread to other parts of the financial sector, creating tighter lending conditions and fueling a general aversion to risk. The Conference Board's present-situation index, which measures how consumers feel about current economic conditions, fell to 130.3 in August from 138.3 the previous month. The expectations index, which measures consumers' outlook for the next six months, fell to 88.2 from 94.4 in July. For a country that relies on consumer spending for two-thirds of economic activity, the August confidence figures suggested economic growth will remain subdued for the near future.
