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Consumer confidence unexpectedly declines

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Consumer confidence unexpectedly declines

9% drop from June reflects short-term concerns.

The Conference Board Consumer Confidence Index, which had improved in June, declined 9% in July to 90.9. The Present Situation Index decreased moderately from 110.3 last month to 107.4 in July, while the Expectations Index declined sharply to 79.9 from 92.8 in June.

Consumers' outlook for the labor market was less optimistic.

Lynn Franco, Director of Economic Indicators at The Conference Board, said "Consumer confidence declined sharply in July, following a gain in June. Consumers continue to assess current conditions favorably, but their short-term expectations deteriorated this month. A less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in financial markets prompted by the situation in Greece and China, appears to have shaken consumers' confidence. Overall, the Index remains at levels associated with an expanding economy and a relatively confident consumer."

Consumers' assessment of current conditions was somewhat less favorable in July. Those saying business conditions are "good" decreased from 26.1% to 24.2%. However, those claiming business conditions are "bad" was virtually unchanged at 17.9%. Consumers were slightly less positive about the job market. Those stating jobs are "plentiful" decreased from 21.3% to 20.7%, while those claiming jobs are "hard to get" increased marginally from 26.1% to 26.7%.

Consumers' optimism about the short-term outlook decreased sharply in July. The percentage of consumers expecting business conditions to improve over the next six months declined from 17.9% to 14.7%, while those expecting business conditions to worsen rose slightly from 10.2% to 10.7%.

Consumers' outlook for the labor market was less optimistic. Those anticipating more jobs in the months ahead decreased from 17.1% to 13.1%, while those anticipating fewer jobs increased from 15.2% to 20.0%. The proportion of consumers expecting growth in their incomes edged down from 17.6% to 17.0%, while the proportion expecting a decline increased slightly from 10.6% to 11.2%.

 

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