The August monthly consumer confidence temperature as taken by The Conference Board is markedly chillier than it was in July – the index dropped from 59.2 all the way down to 44.5. 100 equals the level of confidence of consumers circa 1985.
The Present Situation Index was down only slightly, dropping from 35.7 to 33.3. It was prospects for the future that led consumers down the path to pessimism. The Expectations Index hit the down slope of the roller coaster, dropping from 74.9 to 51.9.
CB’s Lynn Franco said, “Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years (April 2009, 40.8). A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”
There was actually slight improvement in one measure of the present situation – 13.7% of consumers said that business conditions are good at the moment, and while that’s nothing to write home about, it’s better than July’s 13.5% reading. However, 40.6% say business conditions are bad, up from 38.7%.
Employment prospects are also diminished – 49.1% said jobs are hard to get, compared to 44.8% in July.
11.8% expect that conditions will improve in the next six months, down from 17.9% in July; and on the flip side, 24.6% expect business conditions to deteriorate, compared to 16.1% in July.