Consumer Confidence Fell In August But Some Spending Is Unaffected
Consumer confidence slipped in August to its lowest level since February, following a contraction in July. The Conference Board Consumer Confidence Index reached 113.8 in August, down from 125.1 in July.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 147.3 from 157.2 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 91.4 from 103.8.
“Consumer confidence retreated in August to its lowest level since February 2021 (95.2),” says Lynn Franco, senior director of economic indicators at The Conference Board. “Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a less favorable view of current economic conditions and short-term growth prospects. Spending intentions for homes, autos and major appliances all cooled somewhat; however, 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.”
Consumers’ appraisal of current business conditions declined in August. The share describing business conditions as “good” slipped from 24.6 percent to 19.9 percent, while the percentage saying they are “bad” climbed from 20 percent to 24 percent. Their take on the labor market also softened, with the portion saying jobs were plentiful easing slightly from 55.2 percent to 54.6 percent. The percentage of consumers saying they are hard to get rose from 11.1 percent to 11.8 percent.
Consumers’ optimism about the short-term business conditions outlooks also deteriorated in August—22.9 percent of consumers expect business conditions will improve, down from 30.9 percent one month earlier, while 17.8 percent expect business conditions to worsen, up from 11.9 percent. Confidence in the short-term labor market also softened. In August, 23 percent of consumers expect more jobs to be available in the months ahead, down from 25.5 percent. And 18.6 percent anticipate fewer jobs, up from 17.8 percent.
Regarding their short-term financial prospects, consumers were also less upbeat. The share expecting their incomes to increase declined from 20 percent to 17.9 percent, and the percentage expecting incomes to decrease rose from 8.8 percent to 10.1 percent.