Consumer confidence declines
August figure a 6-month low amid virus, inflation worries
U.S. consumer confidence fell in August to the lowest level since February amid rising concerns about the rapidly spreading delta variant of the coronavirus and worries about higher inflation.
The Conference Board reported Tuesday that its consumer confidence index dropped to a reading of 113.8 in August, down from a revised 125.1 in July. It was the lowest level for the index since a reading of 95.2 in February. The index has a baseline value of 100 set in December 1966.
The July index was revised down from an initially reported 129.1, which followed a reading of 128.9 in June, the best showing since before the pandemic struck in February 2020.
The Conference Board said the spread of the delta variant of the coronavirus has dented consumers’ views of the economy and threatens to undermine spending on services. The latest spike in covid-19 infections has already curbed restaurant reservations, airline travel and hotel occupancy. At the same time, Americans are paying more at the grocery store and at the gas pump, which may be further weighing on sentiment.
With the August decline, the overall index is 19 points below its pre-pandemic level. The drop in August reflected a weakening in the current conditions and expectations components of the index.
The report showed that spending intentions for purchases of homes, autos and major appliances cooled in August, but the percentage of consumers intending to take a vacation in the next six months continued to climb.
“While the resurgence of covid-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead,” said Lynn Franco, senior director of economic indicators for the Conference Board.
The Conference Board’s gauge of current conditions fell to 147.3, the lowest reading since April. Consumers’ views of present business conditions declined, while economic expectations dropped to 91.4, a sevenmonth low.
Consumers were less upbeat about their future income and job prospects. The share of consumers who said jobs were “plentiful” eased slightly from a multidecade high.
Consumers said they were somewhat less likely to purchase cars, homes and appliances. Vacation plans for the next six months edged higher.
The decline in the Conference Board’s monthly consumer confidence gauge follow a sharp fall reported Friday in the reading from the University of Michigan’s consumer sentiment survey.
Kathy Bostjancic, chief U.S. financial economist for Oxford Economics, said the declines in consumer sentiment were occurring at a time when consumer spending has slowed from the sizzling gains seen in the first six months of the year. But many analysts said they still expect further gains in consumer spending in the coming months, given the high levels of savings households have currently.
“Americans overall are flush with cash and eager to spend it as the economy reopens,” said Robert Frick, corporate economist with Navy Federal Credit Union.