July Consumer Confidence Pulls Back as COVID-19 Surges Again
The Conference Board reported Tuesday morning that its consumer confidence index for the month of July dipped from a 98.3 reading in June to 92.6. The July reading on the current situation improved by 7.5 index points, but the outlook fell by nearly 15 points
The expectations index dropped from 106.1 to 91.5, and the present situation index slid from 94.2 to 86.7. The consensus estimate for July called for a decline to a consumer confidence index reading of 95.0.
The percentage of consumers who said business conditions are “good” remained unchanged at 17.3%. Respondents claiming business conditions are “bad” decreased, from 42.5% to 39.1%.
Consumers’ assessment of the July labor market rose slightly. The proportion stating jobs are “plentiful” increased from 20.5% to 21.3%, and those claiming jobs are “hard to get” dipped from 23.3% to 20.0%.
Lynn Franco, senior director of economic indicators at the Conference Board, noted that the analysts reported “large declines” in the index readings outlook in Michigan, Florida, Texas and California as a result of the resurgence in COVID-19. Consumers are also less optimistic about the short-term (six months) outlook for the economy, the labor market and their personal financial prospects. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending,” Franco commented.
On the jobs front, expectations for new jobs decreased from 38.4% to 30.6% in July, and the percentage of respondents who expect fewer jobs increased from 14.4% to 20.3%. Regarding their own short-term income prospects, 15.1% expect an improvement unchanged from the June reading. The proportion expecting a decrease in income rose from 14.1% to 15.0%.
Optimism about the short-term outlook also slipped in July. The percentage of consumers expecting business conditions to improve over the next six months decreased from 42.4% to 31.6%, while those expecting business conditions to worsen increased from 15.2% to 19.3%.
The Conference Board’s July results are consistent with the preliminary report on July consumer sentiment published earlier this month by the University of Michigan. Consumers’ view of current economic conditions fell from 78.1 to 73.2 index points and consumer expectations dropped from 72.3 to 66.2.
While Congress works on another relief bill, economists worry the coronavirus pandemic still has the potential to cause a wider resurgence in the fall.
The Conference Board’s Consumer Confidence Survey is based on a probability-design random sample and is conducted for the Conference Board by Nielsen. The index baseline is 1985 = 100.