After improving a bit in July, The Conference Board’s Consumer Confidence Index tumbled in August as Americans held tight to their wallets, worried the economy was heading towards another recession.
The Index, which was released on Tuesday, clocked in at 44.5, down from a revised 59.2 in July. The Present Situation Index fell to 33.3 from 35.7, while the Expectations Index plummeted to 51.9 from 74.9 last month.
“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, Director of The Conference Board Consumer Research Center, in a press release. “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.”
The index is now at its lowest level since April 2009.
Consumers believe current conditions are worsening. Consumers reporting business conditions are “bad” increased to 40.6% from 38.7%, while those claiming business conditions are “good” rose to 13.7% from 13.5%. The assessment of employment conditions deteriorated further in the last month. Those reporting jobs are “hard to get” increased to 49.1%, up from 44.8%, while those stating jobs are “plentiful” slipped to 4.7% from 5.1%.
In the short-term consumers are much more pessimistic in August than they were in July. Respondents who expected business conditions to improve over the next six months plummeted to 11.8% from 17.9%, while those expecting business conditions to worsen shot up to 24.6% from 16.1%.
Expectations about the job market fell. Those anticipating more jobs going forward decreased to 11.4% from 16.9%, while those expecting fewer jobs jumped to 31.5% from 22.2%. The proportion of respondents expecting a raise in their income slipped to 14.3% from 15.9%.