Consumer Confidence Declines to 6-Month Low Amid Delta Variant and Inflation Concerns
Long utilized as a marker for inflation, the Consumer Confidence Index was released this morning with a second consecutive decrease in August from July, now down to 113.8 (1985=100).
The survey measured consumers’ assessment of current business and labor market conditions and is often used either as a precursor for inflation and rising prices or an assessment of where already inflated prices will go.
Senior Director of Economic Indicators at The Conference Board Lynn Franco stated “consumer confidence retreated in August to its lowest level since February 2021. Concerns about the Delta variant — and, to a lesser degree, rising gas and food prices — resulted in a less favorable view of current economic conditions and short-term growth prospects.”
The Expectations Index, which measures consumers’ short-term outlook for income, business and labor market conditions fell from 103.8 to 91.4.
Franco also added that spending intentions for homes, autos and major appliances all cooled, coming off pandemic highs. However, she also highlighted that consumers intending to take a vacation in the next six months continued to increase.
Interestingly, the data showed a disconnect between the attitudes consumers had towards the labor market and current jobs reports figures.
The number of consumers that said jobs are “plentiful” slightly decreased from 55.2% to 54.6%. The number of consumers who said jobs are “hard to get” also increased from 11.1% to 11.8%. This comes just ahead of the release of the August jobs report. In July, the Bureau of Labor Statistics report showed almost one million new jobs added to the labor market.
While business owners throughout the country have bemoaned a tight labor market with too many vacancies and not enough workers to fill them, the survey suggests that workers feel there are not enough quality jobs or jobs they are interested in or able to take on.
Other gauges for the short-term six-month outlook also waned. Consumers’ optimism about their short-term financial prospects decreased, with 17.9% of consumers expecting their incomes to increase in the next six months — down from 20%. In fact, the number of people who expect their salaries to decrease in the next six months increased, now at 10.1% up from 8.8%.
The number of consumers who expect more jobs to be available in the months ahead also decreased from 25.5% to 23%. More people now actually anticipate fewer jobs, up to 18.6% from 17.8%.
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