The University of Michigan’s preliminary index of sentiment declined more than forecast, to 78.7 from 84.7 in July. Waning optimism threatens to slow consumer spending, which accounts for about three-fourths of gross domestic product.

The survey ends a week of figures pointing to a continuing slowdown in the economy that may allow the Federal Reserve to keep interest rates unchanged after ending a two-year credit tightening last week. The conflict in Lebanon, which drove energy prices higher, and news of a foiled plot to blow up airliners probably contributed to the decline in confidence, economists said.

“The headline news about the foiled terror plot and high gasoline prices are rattling consumer attitudes,” said Richard Yamarone, chief economist at Argus Research in New York. “This helps the Fed’s cause of pausing in the interest-rate cycle.”

By Shobhana Chandra
Pedro Joaquin Sanchez Belmar