The Conference Board’s Consumer Confidence Index—which declined in June—tumbled further in July. The Index now stands at 97.1 (1985=100), down sharply from 106.3 last month. The Present Situation Index fell to 99.2, down from 104.9. The Expectations Index fell to 95.7, down from 107.2 last month.
“The erosion in consumer confidence represents a significant deterioration in consumer attitudes,” says Lynn Franco, director of The Conference Board’s Consumer Research Center. “The continued decline in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence. The continued decline in the Present Situation Index suggests that consumers would tend to curb their spending in the absence of offsetting incentives.”
Consumer confidence is now at its lowest level since February of this year. And while the current reading is not alarming by historical standards, a continued slide could very well jeopardize the economic recovery.
Consumers’ expectations for the next six months have soured. Those expecting business conditions to deteriorate increased from 7.1% to 9.2%. Those anticipating an improvement in the months ahead fell from 23.7% to 20.9% percent.
The employment outlook also slid in July. The percent of consumers expecting fewer jobs to become available in the next six months increased from 14.3% to 17.1%. The percent of consumers expecting more jobs to become available declined from 20.4% to 17.3%. About 19.5% of consumers expect their incomes to rise over the next six months, down from 20.9% last month.
Consumers’ assessment of the present situation was less favorable in July. Those rating current conditions as “bad” climbed from 19.5% to 22.1%. Those rating current business conditions as “good,” however, increased slightly from 19.9% to 20.1%. Consumers reporting jobs were “hard to get” rose from 23.2% to 24%. Those claiming jobs were plentiful fell from 20.1% to 18.8%.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup, a member of The Interpublic Group of Companies.