Consumer confidence fell in early August to the lowest level since October 2008, a month after the collapse of Lehman Bros. sent the economy tumbling into a severe recession and financial crisis, according to the IBD/TIPP Economic Optimism Index out Tuesday.
The IBD/TIPP gauge fell 1.1 points — 5.1 points since May — to 43.6. Readings below 50 signal pessimism. The six-month outlook rose 2.3 points from a 16-month low to 45.1.
The poll of 837 adults was conducted from Monday through Sunday, finishing two days after the Labor Department said private payrolls grew by just 71,000 in July. At that pace, it would take years to absorb the roughly 8.4 million people who lost jobs during the recession.
IBD/TIPP's personal financial outlook gauge fell 1.7 points to 49.2, showing pessimism for the first time since June 2008.
Americans are also losing faith in the government. The index of confidence in federal economic policies plunged 9.6% to 36.6. The IBD Presidential Leadership Index fell 1.1 points to 47.2, the lowest since Barack Obama took office.
Among independents, a key voting bloc, confidence in both categories has dived more than 30% from peaks, a bad sign for President Obama's Democratic allies heading into November elections.
Democrats' economic optimism reading has fallen by 10% over the past three months to 58.1.
Separately, the National Federation of Independent Business' small-business optimism index fell 0.9 point in July to 88.1, the second straight decline and typical of a "weak or recession-mired economy."
A net -15% of smaller companies expected the economy to improve in the next six months, down 9 points vs. June and 23 points vs. May, NFIB said. A net 2% planned to add staff, up 1 point vs. June.
"The recovery in optimism that we are currently experiencing is very weak compared to recoveries after the 1982 and 1975 recessions," Bill Dunkelberg, NFIB's chief economist, said in a statement. "The small-business sector is not on a sustained positive trajectory, and with this half of the private sector missing in action, the economy's poor growth performance is not surprising."