Consumer confidence in the U.S. unexpectedly dropped in August from a six-year high as Americans faced rising interest rates.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for this month fell to 80 from 85.1 in July, which was the highest since July 2007. The median projection of 68 economists surveyed by Bloomberg called for little change at 85.2.
Higher mortgage rates are threatening to crimp momentum in the housing market that’s contributed to economic growth. At the same time, job growth and increased personal wealth tied to stock portfolios and home values are helping offset the effects of higher payroll taxes and federal government budget cuts that began early this year.
“Interest rates are going up a little bit, that never helps,” Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, said before the report. “But we still have the background of what looks like a still-improving housing market.”
Estimates in the Bloomberg survey of economists ranged from 82 to 87. The index averaged 89 in the five years leading up to the last recession that began in December 2007 and 64.2 during the 18-month slump that ended in June 2009.