U.S. Consumer Confidence Hits Six-Year Low on Drag From Pandemic
(Bloomberg) -- U.S. consumer confidence dropped in August to the lowest since 2014 as consumers soured on employment and business conditions, indicating Americans are becoming despondent amid persistently high joblessness.
The Conference Board’s index decreased to 84.8, the lowest level since the pandemic began, from a revised 91.7 in the prior month, according to a report issued Tuesday. The median estimate of economists surveyed by Bloomberg called for a reading of 93 in August. The group’s gauge of expectations fell 3.7 points to 85.2, the lowest since 2016, while household sentiment about current conditions dropped 11.7 points to 84.2.
The report points to a bumpy economic recovery -- and risks for President Donald Trump’s re-election -- as Americans grapple with high unemployment and uncertainty about future federal stimulus, with a new version of jobless aid just starting to reach Americans. The confidence gauge also remains well below pre-crisis levels, illustrating the depth of the economic hole created by the pandemic, as well as the impact of the surge in infections in June and July.
Other data Tuesday were more upbeat: New-home sales jumped to the highest since 2006, while a regional measure of manufacturing was the strongest in almost two years. Still, the home sales show how higher-income Americans -- with relatively secure jobs and investments in a rising stock market -- are faring compared with lower-income workers, a phenomenon sometimes called a “K”-shaped, or two-track, recovery.
“I found consumers’ more downbeat assessment of the current and future outlook for the labor market both reflective of that two-tracked recovery, but also a possible warning sign that the relatively strong recovery in jobs posted in the past few months could be slowing,” said Kathleen Bostjancic, chief U.S. financial economist at Oxford Economics. “This in turn depresses income expectations, again underscoring that two-tracked recovery.”
What Bloomberg’s Economists Say
“Consumer confidence, as measured by the Conference Board, unexpectedly declined in August as Americans faced growing uncertainty about jobs and income prospects. ... The responses in the report partially capture the slow, unclear process of extending jobless support and other aid.”
-- Eliza Winger
Read more for the full reaction note.
U.S. stocks swung between gains and losses after the report, while yields on 10-year Treasuries briefly fell before rising again.
The share of consumers saying jobs are hard to get jumped to 25.2% from 20.1%. About 30% of consumers said they expect better economic conditions six months from now, down from 31.6% in July.
“Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement.
In fact, respondents indicated they were less likely to make big purchases in the months ahead: the share expecting to buy major appliances fell to 44.8%, the lowest since 2015, while those planning to buy a car dropped to 9.7%, the second-lowest since 2010.
©2020 Bloomberg L.P.