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Consumer Confidence Falls From All-Time High in May

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From Associated Press

Americans grew more concerned about the direction of the U.S. economy in June, a key economic report said Tuesday, with rising interest rates and soaring gasoline prices beginning to eat away at consumers’ confidence.

The Conference Board said its consumer confidence index fell to 138.8 in June from a revised 144.7 in May, which matched the all-time high reached in January. The June index came in below Wall Street analysts’ expectations.

While the reading dropped nearly 6 points this month, it still remains near record levels and was not seen as sign of an end of economic growth. But consumers did begin to indicate in June that they were less optimistic about future economic conditions.

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“While latest signals suggest that the U.S. economic activity should decelerate in coming months, consumers are not expecting this record-breaking economic expansion to end any time soon,” said Lynn Franco, director of the Conference Board’s research center.

The index, based on a monthly survey of about 5,000 households, is closely watched because consumer spending makes up about two-thirds of the nation’s economic activity.

The report comes as economists scour data pointing to the direction of the economy. Some recent reports, including home sales, retail sales, factory orders and unemployment, have offered signs that the economy may be slowing a bit. Rising prices at the gas pump on top of a steady rise in interest rates are putting pressure on consumers.

The economic cooling comes after six interest rate increases by the Federal Reserve over the last year in an attempt to slow growth and keep inflation under control.

The central bank is holding interest rate discussions today in Washington, but most economists believe policy-makers will leave rates unchanged.

“Consumers are feeling a little less optimistic than they were last year,” said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis. “They have felt the effects of the higher gas prices, and the rising interest rates are starting to filter through to the consumer.”

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The muted report on consumer confidence raised expectations on Wall Street that the Fed would hold rates steady when it meets today.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Consumer Confidence

From a monthly survey of 5,000 U.S. households.

Index: 1985=100.

June: 138.8

Source: Conference Board

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