Consumer confidence fell sharply in August

NEW YORK — Consumers’ renewed worries about job prospects led to a bigger-than-expected drop in confidence in August and provided more evidence of the fragility of the economic expansion.

The Consumer Confidence Index, which had been rising since April, dropped 7.5 points to 98.2 from a revised reading of 105.7 in July, according to a report Tuesday from The Conference Board, a private research group.

The reading was well below the 103.5 that analysts expected, and was the lowest since May, when it registered 93.1.

“The slowdown in job growth has curbed consumers’ confidence,” said Lynn Franco, director of The Conference Board’s Consumer Research Center, in a statement. “The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail.”

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

The report of the surprising large decline in consumer confidence came a day after the Commerce Department said consumers spent more freely in July, raising hopes that June’s economic pause would only be temporary. The government disclosed at the same time, however, that personal incomes grew slower than analysts expected in July.

But some economists were not deeply concerned about the dip in confidence.

The consumer confidence report — whose cutoff date for preliminary results was Aug. 24 — captures the period when oil prices surged, briefly topping $49 per barrel, before falling dramatically at the end of the month.

However, Franco said that she hasn’t seen the surge in oil prices taking a “bite out of confidence” in surveys with consumers. Rather, she said, consumers’ overall job outlook is what’s hurting confidence because “it is a source of spending and income.”

Meanwhile, the International Council of Shopping Centers cut its August retail sales forecast on Tuesday to a range of 1.5 percent to 2 percent from the original forecast of 3.5 percent. A number of factors helped dampen sales, including Hurricane Charley, a late Labor Day weekend, higher gasoline prices, and a lack of child tax rebate checks, which boosted business in the year-ago period.

Economists are anxiously awaiting August job figures from the Labor Department, due out on Friday. Analysts are expecting the nation’s nonfarm payrolls to add 150,000 jobs. Job growth slowed dramatically in July — a meager 32,000 jobs were added, the slowest pace since December.