Americans' Confidence In US Economy Falls To Nine-Month Low Despite Signs Of Improvement

Americans’ confidence in the economy fell in August to its lowest since last November, despite many gauges of the economy improving to highs not seen since 2007, a survey released Friday showed.

The closely watched Reuters/University of Michigan consumer sentiment index of consumer sentiment, though a preliminary estimate, fell to 79.2 from 81.8 the month before. Economists polled by Reuters had predicted the index would rise to 82.5.

“The decline… principally reflects the drop back in stock markets over the past few weeks,” said Paul Ashworth, chief economist for Capital Economics, in a research note Friday.

The survey’s measure of current economic conditions rose to 99.6 from 97.4, above a forecast of 97.8, while the survey’s measure of consumer expectations fell for the fourth straight month to 66.2 from 71.8, below an expected 73 and the lowest since last October.

"While the data implies differential prospects for retailers, consumer confidence remains at moderately positive levels, high enough to support a continued expansion in personal consumption during the year ahead," survey director Richard Curtin said in a statement.

A similar survey of consumer confidence by the Conference Board found a nearly opposite reaction last month. That index hit its highest level in July since the recession began. Another survey, by Gallup, found that Americans' confidence in the economy fell in late July to its lowest since March.

As the July jobs report showed, confidence could be low because unemployment is still higher than pre-recession levels, and many are taking lower-paying part-time work though they would like full-time work.

"With employment expanding at a rapid clip, gasoline prices dropping back a little, long-term interest rates collapsing, and equity prices rallying in recent days, we would expect this particular confidence measure to come in a little higher in the final August estimate," Ashworth said.