Confidence Takes Biggest Hit In 2 years

Problems in mortgage, housing and stock markets have American consumers thinking the economy is in the toilet along with Senator Craig.

Turmoil in the stock and housing markets caused the biggest drop in consumer confidence in almost two years in August, according to a closely watched survey released Tuesday.

The Conference Board said its consumer confidence index fell to 105.0 in the latest survey of 5,000 households from a revised 111.9 reading in July.

It was the biggest month-over-month drop since September 2005, when hurricanes Katrina and Rita sent gas prices to then record levels. This time it was problems was a series of financial storms, as consumers focused on problems in subprime mortgages, and falling home and stock prices.

"A softening in business conditions and labor market conditions has curbed consumers' confidence this month," said Lynn Franco, director of the Conference Board's Consumer Research Center, which conducts the monthly survey of 5,000 households. "In addition, the volatility in financial markets and continued subprime housing woes may have played a role in dampening consumers' spirits."

Remember that consumer spending accounts for 2/3 of the economy. Confidence numbers like this would indicate a strong pullback in spending which could result in a recession. I have been calling for that since I started this site. It looks like I could be correct.