U.S. consumer confidence drops more-than-expected in August

Consumer confidence in the United States declined more than expected in August, as an unclear economic outlook and persistent inflation dampened optimism.

The Conference Board's index dipped to 106.1 this month from 114 in July, according to figures released Tuesday. The figure fell short of all forecasts in a Bloomberg survey, reversing most of the previous two months' gains.

The group's current circumstances index slipped to 144.8, the lowest level since November. A measure of consumer expectations, which measures their six-month view, fell to 80.2, remaining marginally higher than in June.

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Furthermore, expected inflation for the coming year increased to 5.8 percent, the first increase in five months. While lower inflation has provided some respite to consumers, excessive costs remain a source of concern.

"Consumers were once again preoccupied with rising prices in general, and for groceries and petrol in particular," Conference Board chief economist Dana Peterson said in a statement.

Following the release of the confidence statistics and concurrent Bureau of Labor Statistics data on July job vacancies, the yield on 10-year Treasury notes dropped and equities continued gains.

Though economists have been extending their recession estimates due to improved economic progress, many still expect a dip in the next year as consumers show symptoms of weakness beneath the surface. Some Americans are using credit cards to make ends meet, while others are reducing their spending entirely.

Furthermore, respondents to the study were more pessimistic about the labor sector, where resilience has been a crucial source of the economy's continued performance this year.

Fewer consumers claimed employment was "abundant", while more said it was "hard to come by. The gap between the two metrics, which economists use to judge labor-market health, has shrunk to its smallest since April 2021.

A separate government study expected Friday will give more insight into the labor market's trajectory. While the US is expected to gain the fewest jobs since the end of 2020 in August, this would still be a respectable rate of payroll growth.

According to the study, high borrowing prices impacted confidence in August. Almost two-thirds of respondents indicated they expected rising interest rates in the coming months, the highest number since November.

"On a six-month moving average basis, plans to purchase automobiles and appliances continued to trend upward, but plans to purchase homes continued to trend downward—more in line with rising interest rates," Peterson said.

(With inputs from Reuters)