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The Conference Board said Consumer Confidence declined in August for the second consecutive month in the US with the index at 84.8 v 93.0 expected and 92.6 in July as the Covid-19 lockdown angt continued and stimulus paymetns expired. Consumers appear to see low interest rates and stimulus payments as a one-off event. Consumers were also more pessimistic about the short-term outlook.

 US Consumer spending

 

The Conference Board

US August Consumer Confidence

  • US August consumer confidence 84.8 vs 93.0 expected Prior was 92.6
  • Present situation 84.8 vs 94.2 prior
  • Expectations 85.2 vs 91.5 prior 
  • Consumers claiming business conditions are "good" declined from 17.5 to 16.4
  • Consumers claiming business conditions are "bad" increased from 38.9  to 43.6
  • Jobs are "plentiful" declined from 22.3 percent to 21.5 percent,
  • Jobs are "hard to get" increased from 20.1 percent to 25.2 percent.
  • Consumers expecting business conditions will improve over the next six months declined from 31.6 percent to 29.9 percent,
  • Consumers expecting business conditions will worsen increased slightly from 20.2 percent to 20.5 percent.
  • Consumers proportion expecting more jobs in the months ahead declined from 29.6 percent to 29.1 percent,
  • Consumers anticipating fewer jobs increased from 21.3 percent to 21.9 percent.
  • Consumers expecting an increase declined from 14.8 percent to 12.7 percent,
  • Cosnumers proportion expecting a decrease rose from 15.8 percent to 16.6 percent.

 

 "Consumer Confidence declined in August for the second consecutive month," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. "The Present Situation Index decreased sharply, with consumers stating that both business and employment conditions had deteriorated over the past month. Consumers' optimism about the short-term outlook, and their financial prospects, also declined and continues on a downward path. 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."

The Conference Board Consumer Confidence Index Decreased in August 25 Aug. 2020

3 key factors will determine the strength of the recovery.

1. Increases in new cases and COVID-related deaths

A prolonged first wave of infections, and the looming threat of a second wave, will continue to suppress global consumer confidence.

2. COVID’s economic impact on jobs and household incomes

Job cuts and furloughs have increased anxiety about reduced incomes and stressed household finances, weakening consumer demand. Even if the outlook starts to recover in the coming months, once government support programs for employers and workers (both in the US and abroad) wind down, consumers will reduce spending even more.

3. Citizens’ trust in government, including its policies to mitigate the virus’s effects

The Conference Board publishes the Consumer Confidence Index® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website: https://www.conference-board.org/data/consumerdata.cfm.

Raising trust in government authorities will be key to increasing the likelihood that citizens will follow public health advice and begin to safely reengage in their local economy, leading to a faster recovery in consumer confidence.

The eventual recovery in consumer confidence will vary by region.

  • In Asia-Pacific, countries well past the first wave of cases, such as China and South Korea, have successfully implemented strict containment policies and have begun to open up their economies again. As new outbreaks are quickly identified and isolated, confidence in those markets will likely rebound fairly quickly. In contrast, other Asian markets, including Indonesia and India, have struggled to provide an effective policy response and may recover more slowly, especially as cases continue to accelerate.
  • Europe has much diversity in the policy response: Germany’s proactive containment measures and wage subsidy program, both among the most robust in Europe, may support a swifter recovery. But in the UK, delayed policy responses may result in greater job and income losses, leading to an extended period of low confidence.
  • In the Gulf Cooperation Council* and North America, especially in Canada, the decline in oil prices adds to the pressure on consumer confidence. In the US and Mexico, where the opening up of the economy has in several cases coincided with rising infection rates, consumer confidence will likely remain depressed for a sustained period.

About The Conference Board

The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916,  a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org.

Source: The Conference Board

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