Consumer Confidence Drops Over Worries About the Future
BOSTON – The Conference Board Consumer Confidence Index decreased in July to 92.6 after increasing in June to 98.3, but the decrease comes from the part of the index that measures economic expectations six months from now. The index measuring current attitudes actually rose 7.5 points.
The Present Situation Index – consumers’ assessment of current business and labor market conditions – improved from 86.7 to 94.2. However, the Expectations Index – consumers’ short-term future outlook for income, business, and labor market conditions – decreased from 106.1 to 91.5 this month.
“Consumer confidence declined in July following a large gain in June,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index improved, but the Expectations Index retreated. Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19.”
Franco says the drop in future expectations “does not bode well for the recovery, nor for consumer spending.” She says consumers “remain subdued about their financial prospects.”
Current outlooks: The percentage of consumers claiming business conditions are “good” was relatively unchanged at 17.3% in July, and those claiming business conditions are “bad” decreased from 42.5% to 39.1%.
Consumers’ appraisal of the job market was more favorable. The percentage of consumers saying jobs are “plentiful” increased from 20.5% to 21.3%, while those claiming jobs are “hard to get” decreased from 23.3% to 20.0%.
Future expectations: Consumers, however, were less optimistic about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months declined from 42.4% to 31.6%, while those expecting business conditions to worsen increased from 15.2% to 19.3%.
Consumers were also less optimistic about the labor market. The proportion expecting more jobs in the months ahead declined from 38.4% to 30.6%, while those anticipating fewer jobs in the months ahead increased from 14.4% to 20.3%.
Regarding short-term income prospects, the percentage of consumers expecting an increase was relatively unchanged at 15.1%, but the proportion expecting a decrease rose from 14.1% to 15.0%.
The monthly Consumer Confidence Survey is, based on a probability-design random sample and conducted for The Conference Board by Nielsen. The cutoff date for the latest preliminary results was July 17.
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