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Consumer confidence ebbs
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August 31, 1999: 12:27 p.m. ET
But U.S. consumers more upbeat in August than economists expected
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NEW YORK (CNNfn) - U.S. consumer confidence fell slightly in August amid sultry summer weather in the Northeast, higher borrowing costs and recent rises in gas prices, a report showed Tuesday.
The consumer confidence index fell to 135.8 in August from an upwardly revised 136.2 in July, the Conference Board reported, above the economists' expectations for a level of 134.2.
"Hikes in interest rates, severe drought conditions in the Northeast, and rising gasoline prices have helped dampen overall consumer optimism," said Lynn Franco, director of the board's Consumer Research Center.
"I think what this may show is that we may have witnessed the peak levels of consumer confidence in the late spring and early summer," said William Sullivan, a bond market expert at Morgan Stanley Dean Witter. "But it confirms that you do have spirits holding at a high level."
Sullivan said, however, the Federal Reserve's top preoccupation is a tight labor market, and whether it could translate into inflation by forcing employers to pay their workers more. High confidence levels in the long term are good for the economy, but for the Fed they are little more than "peripheral inputs" in the broader interest-rate picture.
Consumers still are upbeat long-term. The Conference Board also said about 17 percent of respondents in the 5,000-household poll expected economic conditions to improve in the next six months, about the same level as in July.
The index is drawn from results of a survey of households about their confidence about current and future business conditions, employment trends and income patterns. The index was set at a level of 100 in the base year of 1985. 
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The Conference Board
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