Conference Board Says Consumer Confidence Crashes to 2-Year Low
Tuesday the Conference Board reported that its consumer confidence index fell to 44.5 in August, its lowest level since April 2009. The news follows Friday’s report from the University of Michigan that its consumer-confidence index fell in August to its lowest level since November 2008.
Declining from a downwardly revised 59.2 in July, the Conference Board’s consumer-confidence index had its sixth-largest one-month decline in the last 21 years. “A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade,” said Lynn Franco, director of the Conference Board’s consumer research center. Standard & Poor’s downgraded the U.S. credit rating on August 5 from its top AAA rating to AA+.
The Conference Board’s consumer-confidence reading of 44.5 fell well below economists expectations that the index would decline to 51.9. With the worse-than-expected report, stock markets are heading into negative territory, with the Dow already trading down 80 points in mid-morning trading. One would expect consumer-confidence readings of 90 or above when the economy is in good shape and growing at a reasonably good pace.
Meanwhile, the expectations barometer, which measures respondents’ expectations for business conditions six months in the future, fell to 51.9 in August, its lowest level since April 2009, down from 74.9 in July. The decline is the second-biggest on record. The percentage of respondents expecting business conditions to be worse in six months rose from 16.1% to 24.6% in August, while the majority expect conditions will remain the same. And while most expect that the number of jobs will remain the same, 31.5% expect that there will be fewer jobs six months from now, while 18.7% expect income to decrease as well.
The Conference Board’s present-situation gauge fell to 33.3 in August from 35.7 in July, with 40.6% of respondents saying business conditions are bad, and 49.1% of respondents saying jobs are hard to get.