July Consumer Confidence Dips Amid Coronavirus Resurgence
The Conference Board, New York, said its Consumer Confidence Index fell for the third time in four months in July, amid growing concerns over the resurgence of COVID-19 nationwide.
The Index now stands at 92.6 (1985=100), down from an increase to 98.3 in June. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved from 86.7 to 94.2. However, the Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – decreased from 106.1 in June to 91.5 this month.
“Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects. Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.”
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said without a “firm grip” on the coronavirus response, consumer optimism sagged.
“As the virus flared up again in July, consumer confidence fell. This is the inverse of June when confidence rose amid falling case counts early on,” Quinlan said. “Early on in this crisis, Dr. [Anthony] Fauci [Director of the National Institute of Allergy and Infectious Disease] told the country that we don’t set the timeline, the virus sets the timeline. That axiom fits to what we are seeing in recent trends with the daily increase in case-counts moving inversely with confidence.”
The report said consumers’ assessment of present-day conditions improved in July. The percentage of consumers claiming business conditions are “good” was relatively unchanged at 17.3 percent, while those claiming business conditions are “bad” decreased from 42.5 percent to 39.1 percent. Consumers’ appraisal of the job market was more favorable. The percentage of consumers saying jobs are “plentiful” increased from 20.5 percent to 21.3 percent, while those claiming jobs are “hard to get” decreased from 23.3 percent to 20.0 percent.
Consumers, however, were less optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months declined from 42.4 percent to 31.6 percent, while those expecting business conditions will worsen increased from 15.2 percent to 19.3 percent. Consumers’ outlook for the labor market was also less favorable. The proportion expecting more jobs in the months ahead declined from 38.4 percent to 30.6 percent, while those anticipating fewer jobs in the months ahead increased from 14.4 percent to 20.3 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase was relatively unchanged at 15.1 percent, while the proportion expecting a decrease rose from 14.1 percent to 15.0 percent.