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Business

Debt and stocks sink consumer confidence

WASHINGTON -- A survey of consumer confidence released Tuesday shows Americans were spooked by the debt-ceiling standoff, a downgrade of U.S. long-term debt and a swoon in stock prices.

But maybe only temporarily.

If stock prices stay steady, consumers will likely keep spending, and the economy should improve modestly in the months ahead, economists say.

Most downplayed the results of a Conference Board survey released Tuesday that showed consumers were in a gloomy mood in early August.

"They tend to register their anxiety about the future in these surveys . . . without actually curtailing their spending," said Chris Rupkey, of Bank of Tokyo-Mitsubishi UFJ.

The Conference Board said its consumer confidence index sank to 44.5 in August, a 15-point drop from July. That was a much sharper fall than analysts had expected. And it brought the index to its lowest point since April 2009. A reading above 90 would show the economy was on solid footing.

For August, economists don't expect Americans to cut their spending sharply, if at all. Most foresee consumer spending, which drives about 70 percent of the economy, rising faster in the July-September period than the preceding three months.

Ken Perkins of Retail Metrics Inc., noted that the mood of consumers has been downbeat all year. Yet, sales at retail chains have remained relatively healthy. "There's been a little bit of a disconnect," Perkins said. "Consumers say one thing and do another." -- AP

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