Tuesday's data kept alive concerns the Usa could slide back into recession, spurring investors to buy government bonds upon bets the Federal Reserve would try harder to push down borrowing expenses.
The private-sector Conference Board said its index of consumer attitudes sank in order to 44. 5, from a downwardly revised 59. 2 in July. The July reading was the weakest since April 2009, when the country still languished within recession, while the drop was the largest since October 2008.
"What we're effectively going through is a crisis of confidence, " said Tom Porcelli, an economist at RBC Capital Markets in Ny.
Economists had expected a much-less-pronounced decline.
Consumers' flagging confidence might lead these phones shut their wallets, although retail sales data has not pointed in which direction yet.
So far, data from industrial production to employment have been in line with a slow-growth scenario rather than an outright contraction in economic output. But economists are watching closely for signs of the fresh downturn and will focus sharply on a reading on US work in August on Friday.
"There is basically nothing for consumers to end up being confident about, " said Gennadiy Goldberg, a fixed income analyst at 4CAST in Ny.
Stock markets slid sharply in early August as investors were shaken through the politically contentious fight over cutting the US budget and raising the country's debt limit.
Discouraged by the political process, Standard & Poor's stripped the country of its top-notch AAA credit rating.
The consumer sentiment data weighed on US stocks for many of Tuesday's session, although the Standard & Poor's 500 Index closed greater.
FED EYES STEPS TO SUPPORT RECOVERY
Worries over the economy led the Fed in early August to think about new steps to support growth, like tying the path of interest rates to some specific unemployment level, minutes of the central bank's Aug. 9 meeting launched on Tuesday showed.
At that meeting, the central bank decided to announce it expected to hold rates near zero until at least mid-2013.
While which decision drew three dissents, the most in nearly 20 years, the min's showed some officials wanted even bolder action. Chicago Federal Reserve Bank President Charles Evans made clear in an interview with CNBC that he would have preferred a stronger strategy.
The high level of joblessness is weighing on sentiment and holding the actual economy back. Friday's jobs report is expected to show the unemployment price held at 9. 1% in August.
The Conference Board data suggested things might be getting worse, not better, with an index gauging how difficult it is to locate a job hitting its highest level since November 2009.
HOME PRICES WEAK
Another report showed US single-family home prices fell slightly in June, the latest sign the economy's recovery won't be able to count on help from the housing sector.
The S&P/Case-Shiller composite index of 20 urban centers slipped 0. 1% from the previous month on a seasonally adjusted foundation. A Reuters poll of economists had expected prices to be unchanged.
Prices within the 20 cities fell 4. 5% from a year ago, better than expectations of the 4. 6% decline.
An excess supply of homes, ongoing foreclosures, tight credit and weak demand have kept the housing industry on the ropes and helped to mute the broader economic recovery.
"Basically this really is just more confirmation that housing is moving sideways, " said Brian Jones, an economist at Societe Generale in Ny.