Virus spike weighs on confidence

Consumers a bit gloomier on jobs, economy, index indicates

WASHINGTON — U.S. consumer confidence declined in July by more than forecast as a pickup in coronavirus cases rattled Americans’ sentiment about prospects for the economy and the job market.

The Conference Board said its confidence index decreased to 92.6 from a revised 98.3 in June, according to a report issued Tuesday by the New York research organization.

The weakness was from a drop in the expectations index, which measures consumer views about the short-term outlook for income, business and labor market conditions.

The consumer confidence index is closely watched for signals it can send about future consumer spending, which accounts for 70% of economic activity.

The Conference Board said that the large decline in the expectations index reflected big drops in sentiment in Michigan, Florida,

Texas and California, all states that have seen a resurgence in coronavirus cases.

Less than a third of respondents in the survey said they expected better business conditions and more jobs in the next six months, evidenced by an elevated number of Americans collecting jobless benefits.

Households also may be growing anxious about whether lawmakers will extend benefits such as the extra $600 in weekly unemployment payments that are set to expire in coming days.

“Consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects,” said Lynn Franco, senior director of economic indicators at the Conference Board.

“Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending,” he said.

Robert Frick, an economist at Navy Federal Credit Union, said the big drop in consumer expectations could reflect the fact that many Americans see a fiscal cliff looming.

“More consumers see drops in business conditions and more see fewer jobs ahead,” he said. “The jobs market is slowing, and may be stalling due to the rise in covid-19 infections and bankruptcies.”

The subindex of expectations, an indication of shortterm outlook on the economy, dropped 14.6 points to 91.5, while attitudes about current conditions climbed to a four-month high of 94.2.

Almost 32% of consumers said they expect better economic conditions six months from now, down from 42.4% a month earlier.

Less than 31% see more job availability, compared with 38.4% in June.

Income expectations, however, remained relatively stable.

Consumers’ plans to purchases autos and appliances decreased in July, while the share expecting to buy a house rose to a one-year high.

The overall index stood at a high for this year of 132.6 in February before the pandemic forced shutdowns across the country in March and April.

“Consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects.”

—Lynn Franco, senior director of economic indicators at the Conference Board