The Conference Board Consumer Confidence Index fell to its lowest level since 2014 in August. This is likely due to a combination of increased COVID-19 cases and the end of some government stimulus programs. Consumers are also beginning to see some rent moratoriums and deferrals on debt payments expire, with uncertainty surrounding extension or expansion of these programs at a local or national level.
The headline index was down 6.9 points to 84.8 (1985=100), from 91.7 in July. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – had been on a two-month run of increases. However it declined in August, dropping by nearly 12 points to 84.2 from 95.9. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – decreased to 85.2 from 88.9 in July. After reaching a pre-pandemic high of 106.1 in June, the Expectations Index reflects consumers’ uncertainty with the pandemic, the economy, and the election. Until this portion of the index shows solid and steady improvement, it is likely that spending growth will be equally muted.
The percentage of consumers who believe business conditions will improve in the coming six months dipped slightly from 31.6 to 29.9% after a steep decline last month. Volatility in consumers’ assessment of business conditions remains historically high. Generally, about two-thirds of consumers indicate business conditions will remain the same in the next six months. In the August survey as in July, just over 50% of consumers indicated a change is likely, weighted slightly more negative. The percentage of consumers indicating that present business conditions are “bad” rose slightly to 43.6 from 38.9%. Those who believe business conditions are ”good” declined from 17.5 to 16.4%.
After flipping positive in July, consumers’ assessment of the job market once again turned negative. Consumers who feel jobs are “plentiful” declined from 22.3 to 21.5% in August. Those who feel jobs are “hard to get” increased from 20.1 to 25.2%. Although it represents a less optimistic view of the job market moving forward as more companies indicate potential layoffs are forthcoming, this is still well above the low in April. Links between the health and economic crises persist, and optimism surrounding the job market moving forward will be highly dependent on the course of the pandemic and the ability of businesses to reopen and stay open.