CONFIDENCE FALL CLOUDS OUTLOOK

NEW YORK -- After spending with abandon in the first half of the year, consumers are facing the second half with trepidation.For the first time since March, the Consumer Confidence Index fell, to 98.2 from 105.7. The report led investors to pare their holdings in retail stocks, as the S&P Retail Index slipped 0.51, or 0.1%, to close at 388.92 on the day the consumer confidence numbers were released.

NEW YORK -- After spending with abandon in the first half of the year, consumers are facing the second half with trepidation.

For the first time since March, the Consumer Confidence Index fell, to 98.2 from 105.7. The report led investors to pare their holdings in retail stocks, as the S&P Retail Index slipped 0.51, or 0.1%, to close at 388.92 on the day the consumer confidence numbers were released. Other major indices initially retreated on the news, but then rebounded to finish with mild gains. The major supermarket stocks were down slightly early in the week.

"The slowdown in job growth has curbed consumer confidence," said Lynn Franco, director of the board's Consumer Research Center, in a statement. "The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail."

The Conference Board's August reading was not only 7.5 points short of July's two-year high, but fell well below economists' forecasts of a more modest dip, to 103.5. The Present Situation Index declined to 100.7 from 106.4 last month, and the Expectations Index fell to 96.6 from 105.3, the Conference Board said.

As for employment, consumers describing jobs as "plentiful" fell to 18.1% from 19.7% a month ago. Those who said jobs were "hard to get" remained essentially flat at 25.8%, vs. 25.7% in July.

"No surprises here," said Richard Hastings, retail analyst and economist at Bernard Sands. "Whenever the Present Situation Index is higher than the Future Expectations Index, as it was in July, that is a warning signal. When that occurs for a few consecutive months, that is a negative indicator."

Hastings said various indicators, including the confidence report, personal income and July consumer spending, are starting to point to something stronger than a soft patch. "The very important personal income report said savings is at 0.6%, and there has been almost no growth in disposable personal income," Hastings said. "Those are weak enough figures that they'll pull consumer spending back."

Hastings said it looks as if the economy is entering a period of "lower than necessary growth."