Consumer Confidence Sinks Most in 2 Years in Reaction to Recent Market Disruptions

August consumer confidence saw the largest monthly drop since the reaction to Hurricane Katrina in 2005. The index fell to 105 (consensus 104) in August from a revised lower 111.9 in July (a six year high). The actual index has fallen to a one year low. In August 2006 it was at 100.2.

Both current conditions and future expectations fell in August, with current conditions dropping more. Fewer people reported jobs as plentiful (27.5%) while jobs hard to get rose to 19.7%. Inflation expectations held steady as did people's income growth expectations.

As expected, plans for purchasing durable goods declined, but surprisingly plans to buy a house rose again, to 3.5%, after bottoming in May at 2.8%.

Consumer confidence is watched for signs of consumer health and willingness to spend money. Other confidence surveys have recently shown even larger declines.