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Consumer Confidence Falls to Nine-Month Low

Business

"This report is a little disturbing going into the fall."

Americans are feeling worse about the economy than they have in a long time -- a fact that could have wide-reaching implications everywhere from Wal-Mart to the White House.

Driven by growing concerns over the job market, consumer confidence has fallen to its lowest point since November 2011, according to The Conference Board, a private research group.

"And consumers don't believe conditions are likely to change. Only 15.4% of people surveyed expect that there will be more jobs available in the next six months, down from 17.6% in July," CNN Money reports.

"The survey also found that only 16.5% expect business conditions to improve in the next six months, down from 19% who were looking for better times ahead last month," the report adds.

August's reading not only threatens to put a damper on retail sales for the back-to-school and winter holiday seasons -- the two biggest shopping periods of the year -- but it also could have an impact on how Americans vote in November's presidential election.

Mark Vitner, a Wells Fargo Securities senior economist, says he has looked at October confidence figures during the past elections of sitting presidents since 1972. No president has been re-elected when confidence was below a reading of 90, which indicates a healthy economy. The index hasn't reached that level since December 2007.

"This report is a little disturbing going into the fall," Vitner said. "Consumers are less optimistic about the future."

The New York-based Conference Board said its Consumer Confidence Index in August fell to 60.6, down from a revised 65.4 in July and the 66 analysts were expecting. The index now stands at the lowest it's been since November 2011 when the reading was at 55.2.

The Consumer Confidence index, based on a survey conducted Aug. 1 to Aug. 16 with about 500 randomly selected people nationwide, underscored Americans' anxiety about the future. Consumer confidence is widely watched because consumer spending accounts for 70 percent of U.S. economic activity.

"Consumers were more apprehensive about business and employment prospects," said Lynn Franco, director of Economic Indicators at The Conference Board in a statement.

In the latest reading, the percentage of consumers expecting business conditions to improve over the next six months declined to 16.5 percent from 19. Those expecting more jobs in the months ahead declined to 15.4 percent from 17.6 percent, while those expecting fewer jobs rose to 23.4 percent from 20.6 percent.

In addition to worries about jobs and business conditions, Americans' outlook also may be influenced by gas prices. They fell sharply from a peak of $3.94 in early April, but have started to surge again in recent weeks. In fact, gas prices at the pump rose 19 cents to $3.71 during the period that captures the survey.

Americans also are worried that the U.S. economy will go off a "fiscal cliff" at the end of the year, said Vitner, the Wells Fargo economist. That's when tax increases and deep spending cuts will take effect, unless Congress reaches a budget agreement by then.

Whether or not Congress will do that is doubtful.

The Associated Press contributed to this report. All photos courtesy AP.

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