Consumer confidence tumbles

August 28, 2012: 12:33 PM ET
consumer confidence
Consumer confidence fell to the lowest level of the year in August.
NEW YORK (CNNMoney)

Consumer confidence tumbled in August, with the latest reading indicating the most pessimism so far this year.

The closely watched index from The Conference Board, a leading business research firm, fell to 60.6 from 65.4 in July. It's the worst reading since November, and was driven down by growing concerns over the job market, as well as the outlook for business conditions over the next six months.

Only 7% of those surveyed said that jobs are plentiful, down from 7.8% who believed that in July. Nearly six times as many believe jobs are tough to find.

And consumers don't believe conditions are likely to change. Only 15.4% of people surveyed expect that there will be more jobs available in the next six months, down from 17.6% in July. The survey also found that only 16.5% expect business conditions to improve in the next six months, down from 19% who were looking for better times ahead last month.

Consumer confidence is watched by economists and investors for what it might mean for consumer spending. Paul Dales, senior U.S. economist for Capital Economics, said the latest reading "suggests that more households are intent on keeping their wallets in their pockets."

Fewer consumers said they intended to buy a car or major appliance in the next six months.

Related: Housing rebound in site

But there were some glimmers of optimism as the number of people who expect to buy a home rose, as did those who plan to travel on vacation rose. And 15.7% expect to see their own income to improve in the next six months, which is up from July's reading and matches the most optimistic reading over the last 12 months.

But Dales said the weak confidence reading is an argument for the Federal Reserve taking additional steps at its September meeting to try to provide more stimulus to businesses and consumers.

Last week, in a reply to California Rep. Darrell Issa, Federal Reserve Chairman Ben Bernanke said the central bank still has room to boost the economy if needed. Bernanke is expected to speak Friday at a key economic symposium hosted by the Federal Reserve Bank of Kansas City every year in Jackson Hole, Wyo.

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