Consumer Confidence ‘Deteriorates’ in August

De Beers Beverly Hills store. Photo credit: Anthony DeMarco

The Conference Board Consumer Confidence Index, which improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. It is the lowest reading since April 2009. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, The Conference Board Consumer Research Center director. “A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway 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.”

Consumers’ appraisal of present-day conditions weakened further in August. Consumers claiming business conditions are “bad” increased to 40.6 percent from 38.7 percent, while those claiming business conditions are “good” inched up to 13.7 percent from 13.5 percent. Consumers' assessment of employment conditions was more pessimistic than last month. Those claiming jobs are "hard to get" increased to 49.1 percent from 44.8 percent, while those stating jobs are “plentiful” declined to 4.7 percent from 5.1 percent.

Consumers' short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent. Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

Consumer Confidence Index Down 8.6% in March

The Conference Board Consumer Confidence Index, which had increased in February, declined in March. The Index now stands at 63.4 (1985=100), down from 72 in February. The Present Situation Index improved to 36.9 from 33.8. The Expectations Index decreased to 81.1 from 97.5 last month.

“The sharp decline in confidence was prompted by a sharp decline in expectations,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions. On the other hand, consumers’ assessment of current conditions improved, indicating that while the short-term future may be uncertain, the economy continues to expand.”

Consumers’ assessment of current conditions improved in March. Those claiming business conditions are “good” increased to 15.1 percent from 12.4 percent, while those claiming business conditions are “bad” decreased to 37 percent from 39.3 percent. Consumers’ appraisal of the job market, however, was slightly less favorable than in February. Those saying jobs are “hard to get” edged up to 44.6 percent from 44.4 percent, while those stating jobs are “plentiful” dipped to 4.4 percent from 4.9 percent.

Consumers’ short-term outlook was considerably less favorable than in February. The proportion of consumers expecting business conditions to improve over the next six months declined to 20.6 percent from 25.2 percent, while those anticipating business conditions will worsen increased to 16.2 percent from 10.3 percent. Consumers were also more downbeat about the labor market. Those expecting more jobs in the months ahead declined to 19.9 percent from 21.2 percent, while those anticipating fewer jobs rose to 20.7 percent from 15 percent. The proportion of consumers expecting an increase in their incomes declined to 15.3 percent from 17.4 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by The Nielsen Company. The cutoff date for March’s preliminary results was March 16.

Consumer Confidence Index Increases

The Conference Board Consumer Confidence Index, which had dipped in December, increased in January. The Index now stands at 60.6 (1985=100), up from 53.3 in December. The Present Situation Index improved to 31.0 from 24.9. The Expectations Index increased to 80.3 from 72.3 last month.

“Consumers have begun the year in better spirits. As a result, the index is now near levels not seen since last spring (May 2010, Index 62.7),” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers rated business and labor market conditions more favorably and expressed greater confidence that the economy will continue to expand and generate more jobs in the months ahead. Income expectations are also more positive. Although pessimists still outnumber optimists, the gap has narrowed.”

Consumers’ assessment of current conditions was more positive in January. Those saying business conditions are “good” increased to 9.8 percent from 7.7 percent, while those saying business conditions are “bad” was virtually unchanged at 40.4 percent. Consumers’ appraisal of the job market was also more upbeat than last month. Those claiming jobs are “plentiful” rose to 5.2 percent from 4.2 percent, while those claiming jobs are “hard to get” declined to 43.4 percent from 46 percent.

Consumers’ short-term outlook was more optimistic than in December. Those anticipating an improvement in business conditions over the next six months increased to 19 percent from 16.8 percent, while those anticipating business conditions will worsen decreased to 11.3 percent from 11.8 percent. Consumers were also more optimistic about the job market. Those anticipating more jobs in the months ahead increased to 16 percent from 14.2 percent, while those expecting fewer jobs declined to 17.5 percent from 19.2 percent. The proportion of consumers expecting an increase in their incomes rose to 11.4 percent from 9.9 percent.

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 TNS, a custom research company.