The report find that the consumer confidence index fell to 105.0 in August from a revised 111.9 in July, which was a cyclical high. This is the lowest level of confidence since August 2006 and the biggest drop since the aftermath of Hurricane Katrina in September 2005.
The decline in confidence however wasn't as large as expected. Economists were forecasting the index to decrease to 104.0 from the initial July reading of 112.6, according to a survey conducted by MarketWatch.
Economists believed that the continued negative news from the credit crunch in financial markets would lead to a sharp reversal in confidence.
Lynn Franco, director of the Conference Board's research center, said the continued problems stemming from the woes in subprime mortgages may have played a role in the drop in confidence, but softening business and labor market conditions were also factors.
"But despite less favorable conditions and in spite of all the recent turmoil, consumers still remain confident. And, current index levels suggest further economic growth in the months ahead," Ms. Franco said in a statement.