That sentiment, however, revived inflation fears on Wall Street. The Dow Jones industrial index, which had been up nearly 68 points during morning trading, quickly reversed course on worries the robust economy would push interest rates even higher. Today's two reports are viewed as key information on the current state of the economy because both are measurements from August. In contrast, figures in many government economic releases are at least a month old. The declines in consumer confidence in July and August followed eight consecutive monthly increases that led to the 30-year high reading of 139.0 in June.
Consumers are still willing to spend at a fairly rapid clip.
Consumer sentiment is an important economic indicator since consumer spending accounts for two-thirds of the nation's overall economic activity. Slightly While consumer confidence remains near record levels, Americans may begin to curtail purchases of cars and washing machines in light of rising interest rates. The Federal Reserve has raised key interest rates twice this summer in an effort to cool consumer and business spending, which could drive up prices. Consumers are less confident about current economic conditions and job prospects than they were in July, the survey said, with slight increases in the proportion saying business conditions are bad and jobs are hard to get. But the dip in optimism in August did not carry over into Americans' expectations for the next six months.