A jobless rate that is projected to hover near 10% for the rest of the year means household spending, which accounts for 70% of the economy, will take time to recover, Bloomberg reported. Concerned consumers are focused on saving more and paying down debt.

"Faith in the economic recovery is failing," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia, who had forecast the confidence index would drop to 50.3. "It'll be 2013 before we see any semblance of normality in the labor market. It means weaker purchases."

The index--which measures how shoppers feel about business conditions, the job market and the next six months--had been recovering fitfully since hitting an all-time low of 25.3 in February 2009, the Associated Press reported. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

The proportion of Americans who expected their incomes to rise in the next six months fell to 10%, the lowest since April 2009. "Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves," said Lynn Franco, director of the New York-based Conference Board's consumer research center.

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