Consumer Confidence Index Drops Nearly 15 Points in August
The Conference Board Consumer Confidence Index, which had improved slightly in July, plummeted in August. The index now stands at 44.5 (1985=100), down from 59.2 in July. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 in July.
Consumers’ appraisal of present-day conditions weakened further in August. Consumers claiming business conditions are “bad” increased to 40.6% from 38.7%, while those claiming business conditions are “good” inched up to 13.7% from 13.5%. Consumers’ assessment of employment conditions was more pessimistic than last month. Those claiming jobs are “hard to get” increased to 49.1% from 44.8%, while those stating jobs are “plentiful” declined to 4.7% from 5.1%.
Consumers’ short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8% from 17.9%, while those expecting business conditions to worsen surged to 24.6% from 16.1%.
Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4% from 16.9%, while those expecting fewer jobs increased to 31.5% from 22.2%. The proportion of consumers anticipating an increase in their incomes declined to 14.3% from 15.9%.
“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, director of The Conference Board Consumer Research Center. “The index is now at its lowest level in more than two years. A contributing factor may have been the debt ceiling discussions, since the decline in confidence was well under way before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by The Nielsen Co., a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was August 18.