U.S. consumer confidence plummets in August

Consumer confidence fell sharply in August amid the debate regarding the debt ceiling, Standard & Poor's (S&P's) downgrade of the U.S. credit rating and fear of another recession, according to The Conference Board.

The Conference Board's Consumer Confidence Index dropped from 59.5 in July to 44.5 in August. A reading of 90 or higher indicates a healthy economy.

The index measures how shoppers feel about business conditions, the job market and the next six months. Economists watch the index closely because consumer spending accounts for about 70 percent of economic activity and is a crucial part of a strong rebound.

"Consumer confidence deteriorated sharply in August as consumers grew significantly more pessimistic about the short-term outlook," says Lynn Franco, director of The Conference Board Consumer Research Center. "The index is now at its lowest level in more than two years (April 2009, 40.8). A contributing factor may have been the debt ceiling discussions because the decline in confidence was well underway before the S&P downgrade. Consumers' assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence."

Date : 9/6/2011