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Consumer Confidence Falls

Conference Board index erases early summer gains, as labor market cools and high interest rates bite.

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Consumer Confidence Falls
Gasoline prices continue to worry consumers. PHOTO: bunyarit/iStock.com

Is the (economic) party over? The latest gauges of consumer sentiment by The Conference Board show signs it may well be.

Specifically, Consumer Confidence Index declined in August to 106.1 (1985=100), from a downwardly revised 114.0 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 144.8 (1985=100) from 153.0. The Expectations Index— based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 80.2 (1985=100) in August, reversing July’s sharp uptick to 88.0.

Expectations were a hair above 80—the level that historically signals a recession within the next year. Although consumer fears of an impending recession continued to recede, the Conference Board still believes one is likely before year-end.

“The fall in consumer confidence in August erased back-to-back increases in June and July,” said Dana Peterson, the board’s Chief Economist. “August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular.”

The pullback in consumer confidence was evident across all age groups—and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000. Confidence held relatively steady for consumers with incomes between $50,000 and $99,999.”

“Assessments of the present situation dipped in August on receding optimism around employment conditions: fewer consumers said jobs are ‘plentiful’ and more said jobs are ‘hard to get,’” Peterson said. “Hard data confirm that employment gains have slowed, overall wage increases are less generous compared to a year ago, and the average number of weeks of unemployment is ticking upward.

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Since launching in 2014, INVISION has won 23 international journalism awards for its publication and website. Contact INVISION's editors at editor@invisionmag.com.

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