Consumer Confidence Falls to 6-Year Low
The Conference Board, New York, reported its Consumer Confidence Index fell for the second straight month in August to a six-year low.
The Index now stands at 84.8, down from 91.7 in July. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased sharply from 95.9 to 84.2. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined from 88.9 in July to 85.2 this month.
Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board.
“The initial relief that followed the lifting of lockdowns has been replaced by a resigned acceptance of a new way of life, but recent progress at containment may signal a turn,” said Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “Consumer Confidence is lower now than it was in April and May at the height of the lockdowns. Still confidence is not as battered as it typically might be during a recession.”
The report said consumers’ assessment of present-day conditions receded in August. The percentage of consumers claiming business conditions are “good” declined from 17.5 percent to 16.4 percent, while those claiming business conditions are “bad” increased from 38.9 percent to 43.6 percent. Consumers’ appraisal of the job market was also less favorable. The percentage of consumers saying jobs are “plentiful” declined from 22.3 percent to 21.5 percent, while those claiming jobs are “hard to get” increased from 20.1 percent to 25.2 percent.
Consumers were also more pessimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months declined from 31.6 percent to 29.9 percent, while those expecting business conditions will worsen increased slightly from 20.2 percent to 20.5 percent. Consumers’ outlook for the labor market was also less positive. The proportion expecting more jobs in the months ahead declined from 29.6 percent to 29.1 percent, while those anticipating fewer jobs increased from 21.3 percent to 21.9 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase declined from 14.8 percent to 12.7 percent, while the proportion expecting a decrease rose from 15.8 percent to 16.6 percent.
“What is particularly disconcerting is that the expectations component at 85.2 is now at a fresh period low,” Quinlan said. “As recently as June, this measure was back up above 100 and offered hope that a consumer-led rebound was still in the cards. Less so today.”
