Consumer Confidence: Surprise Drop

Bottom Line:  The Conference Board's Consumer Confidence Index fell sharply in August, well below expectations. Consumers reported a more dour mood about their current situation and future expectations. The survey's economist noted that many respondents expressed concerns about another increase in gasoline and grocery store prices. While confidence was relatively steady for households earning $50-100k per year, wealthier and lower-income households accounted for most of the decline in confidence. The labor differential -- those reporting jobs "plentiful" versus "hard to get" -- fell sharply, suggesting the easing in labor market conditions was starting to affect consumer confidence. Overall, the level of future expectations remains concerning, at a level historically consistent with recessions. However, the current situation index suggests the consumer will plod along, growing very slowly.