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 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. The decline this month was the biggest since December.

Higher mortgage rates are threatening to crimp momentum in the housing market that’s contributed to the economic expansion. 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.”
Stocks were little changed after the report. The Standard & Poor’s 500 Index declined 0.1 percent to 1,659.24 at 10:23 a.m. in New York.
Survey Results
Estimates (CONSSENT) 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.
The early August setback in the Michigan index was larger than projected by the weekly Bloomberg Consumer Comfort Index, which slipped from its highest level in more than five years. The comfort gauge fell to minus 26.6 for the period ended Aug. 11, its first drop in a month. The reading was the second-strongest since January 2008, behind the prior week’s minus 23.5.
The Michigan survey’s current conditions index, which takes stock of Americans’ view of their personal finances, dropped to 91 from a six-year high of 98.6 in July. The 7.6 point decline was the biggest in three years.
The group’s index of expectations six months from now decreased to 72.9 in August from 76.5 last month.

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