Consumer confidence takes a dip
Index at 6-year low as optimism wanes on jobs, economy
WASHINGTON — U.S. consumer confidence dropped in August to the lowest since May 2014 as consumers soured on employment and business conditions, indicating Americans are becoming despondent as high joblessness persists.
The Conference Board, a New York research organization, reported Tuesday that its consumer confidence index declined to a reading of 84.8 in August.
The drop, which followed a July decline to 91.7, put the index 36% below its high point for the year reached in February, before the coronavirus began to seriously affect the United States.
Because consumer spending accounts for 70% of economic activity in the U.S., a drop-off in confidence gets a lot of attention from economists.
“Consumer spending has rebounded in recent months but increasing concerns among 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 indicators at the Conference Board.
Other data Tuesday was more upbeat: New-home sales jumped to the highest since 2006, while a regional measure of manufacturing was the strongest in almost two years. Still, the home sales show how higher-income Americans — with relatively secure jobs and investments in a rising stock market — are faring compared with lower-income workers, a phenomenon sometimes called a “K”-shaped, or twotrack, recovery.
“I found consumers’ more downbeat assessment of the current and future outlook for the labor market both reflective of that two-tracked recovery, but also a possible warning sign that the relatively strong recovery in jobs posted in the past few months could be slowing,” said Kathleen Bostjancic, chief U.S. financial economist at Oxford Economics. “This in turn de
presses income expectations, again underscoring that twotracked recovery.”
The part of the index that measures present conditions decreased sharply with consumers indicating that both business and employment conditions have deteriorated sharply over the past month. Consumer optimism about the short-term outlook and their financial prospects also declined.
“Consumer confidence has now taken two steps back after one giant step forward in June,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
“Initial hopes for a faster return to a pre-pandemic normal have faded.”
The share of consumers saying jobs are hard to get jumped to 25.2% from 20.1%. About 30% of consumers said they expect better economic conditions six months from now, down from 31.6% in July.
Respondents indicated they were less likely to make big purchases in the months ahead: The share expecting to buy major appliances fell to 44.8%, the lowest since 2015, while those planning to buy a car dropped to 9.7%, the second-lowest since 2010.