NEW YORK — After spending with abandon in the first half of the year — especially on luxury items — high fuel costs and weak job growth have consumers 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 percent, to close at 388.92. Other major indices initially retreated on the news, but then rebounded to finish with mild gains in light trading. The Dow Jones Industrial Average added 51.4 points, or 0.5 percent, to finish at 10,173.92, while the S&P 500 improved 5.09 points, or 0.5 percent, to close at 1,104.24.

The plunge in the consumer confidence reading, combined with a lower-than-forecast Midwest manufacturing report and anxiety over this Friday’s employment report came at an inconvenient time for President Bush and Republicans as they gathered in New York for their convention.

“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 percent from 19.7 percent a month ago, while those who said jobs were “hard to get” remained essentially flat at 25.8 percent versus 25.7 percent 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.”

This story first appeared in the September 1, 2004 issue of WWD. Subscribe Today.

Hastings said various indicators, including the confidence report, personal income and July consumer spending, are synchronizing and starting to point to something stronger than a soft patch.

“The very important personal income report said savings is at 0.6 percent 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.”

Although consumers appear far more cautious going forward, for the first half of the year they opened their wallets with an abundance of confidence, pushing up real personal spending by a robust 3.5 percent.

That trend was also seen in Monday’s July consumer spending report from the Commerce Department that showed a growth rate of 0.8 percent for the month after a decline in June. But there could be some deceleration if consumers’ behavior begins to reflect their confidence levels. August’s figures are released at the end of the month.

For the first six months of the year, annualized seasonally adjusted expenditures on personal consumption, excluding food, rose to $113.1 billion from $109.3 billion, according to the Bureau of Economic Analysis. With the exception of motor vehicles and parts, spending on all goods and services saw significant gains, especially clothing and shoes, which jumped 6 percent to $116.5 billion from $109.9 billion last year.

Other expenditures showing robust gains included furniture and household equipment, which shot up 12.5 percent to $138.4 billion, and recreation, which gained 3.1 percent to $111.3 billion. All durable goods increased 3.6 percent to $124.6 billion and all nondurable goods grew 4.8 percent to $112.5 billion.

Given the confluence of negative indicators, Hastings expects second-half spending to grow, but at a more moderate rate of perhaps 2 to 2.5 percent. Durable goods will likely be volatile, and greater weakness in nondurable goods — which includes apparel — will pull overall spending down from the first-half rate, Hastings predicted.

Seemingly immune to these changes is the high-end market. Luxury consumer confidence and spending rebounded in the second quarter, according to Unity Marketing’s Luxury Tracking Study. The luxury goods consumption index rose 4.9 points to 102.7 from 97.8 in March, reflecting greater confidence in the economy.

Unity’s survey revealed 36 percent of luxury consumers personally feel better off now than they did during the first quarter and 29 percent believe the country as a whole is better off. The study comprises 1,000 U.S. households with incomes of at least $75,000, one-third of which have incomes greater than $150,000.