An unexpected number of Americans kept their wallets closed in August as consumer confidence figures tumbled to their lowest in nine months.
A new report released Tuesday by the Conference Board, a private industry group, said its index of consumer spending attitudes fell to 60.6 from a downwardly revised 65.4 the month before, according to Reuters. It was the lowest performance since November 2011.
A Reuters poll showed that economists expected an increase to 66.
Bloomberg News reports that a combination of factors including rising gas prices, a jobless rate stubbornly stuck above 8 percent and limited income growth are keeping people pessimistic about the future economy.
The more Americans stay glum, the higher the risk they will reign in the household spending that accounts for about 70 percent of the US economy.
“The consumer is still very cautious,” Jim O’Sullivan, chief U.S. economist for High Frequency Economics Ltd, told Bloomberg.
“The labor market is still relatively weak. There’s a lot of uncertainty about policy ahead of the election”, he said.
Economists expected American consumers to be feeling better about the economy after improvements in both the job market and home sales. AP reports that the Standard & Poor’s/Case-Shiller home price index, released Tuesday, showed home prices rose in June in the first year-over-year increase since the summer of 2010.
The rise in home prices seems to be spreading across the country. All 20 cities tracked by the index rose in June from May, reports AP. It's the second consecutive time in which every city posted month-over-month gains.
The job market is also slowing making gains with employers adding 163,000 jobs in July, the most since February.
In one more sliver of good news, the number of consumers who expect an increase in their incomes went up to 15.7 per cent from 14.2 per cent, according to the Index.