Americans’ faith in the economy tumbled in August to a nine-month low, a business research organization reported Tuesday, a fall that could translate to tightened purse strings if job growth stumbles or fuel costs rebound.
The Conference Board said its confidence index fell to a reading of 99.6, down from 107 in July. The index was lower than analysts’ expectations of 102.5.
The last time the index fell below 100 was in November, which saw a reading of 98.3.
Lynn Franco, director of the New York-based group’s consumer research center, said this month’s drop -- the largest one-month decline since Hurricane Katrina ravaged the Gulf Coast a year ago -- reflected expectations of slower growth in the coming months.
“You’ve got a deterioration in business conditions coupled with lackluster job growth,” Franco said.
Americans’ sentiment about the labor market worsened in August, with the number of consumers saying jobs are “plentiful” decreasing to 24.4% in August from 28.6% in July, and those saying jobs are “hard to get” increasing to 21.1% from 19.6%.
The report -- derived from responses through Aug. 22 to a survey mailed to 5,000 households in a consumer research panel -- also indicated that consumers’ view of labor market prospects weakened.
Those expecting more jobs to open in the next few months fell to 14% in August from 14.3% in July, and those expecting fewer jobs rose to 18.3% from 16.5%.
Consumers expecting a pay raise in the months ahead slipped to 17.7% in August from 18.3% in July.
Inflation worries remained high as well, even with the recent retreat in gasoline prices.
“Consumers are feeling their dollars are getting stretched a little thin,” Franco said.
The Conference Board’s present situation index, which measures how respondents feel about current economic conditions, plummeted to 123.4 in August from 134.2 in July.
The expectations index, which gauges consumers’ outlook over the next six months, dropped to 83.8 in August from 88.9 a month earlier.
Consumers saying overall conditions are “good” fell to 26.1% in August from 27.3% in July. Those saying conditions are “bad” rose to 16.7% from 15%.