Warning signs for Q4? Consumer Confidence falls again in August

NEW YORK – U.S. consumers are split once again – the latest report from the Conference Board shows a positive uptick in how they view the present business and labor conditions, but the outlook on the future has dipped.

The Consumer Confidence Index decreased 0.8 points to 89.4 for August, down from 90.2 reported in July. The Present Situation Index rose for the first time in three months, up 6.8 points to 121.2, but the Expectations Index fell 5.8 points to 68.2

“Consumer confidence moderated slightly in August for a second consecutive month,” said Dana M. Peterson, chief economist with the Conference Board. “The Expectations Index slipped further into negative territory, which was offset by a moderate rise in the Present Situation Index after declining in the past three months. Consumer appraisals of current business conditions were mildly positive. Perceptions of the current labor market improved, reversing three months of moderate decline. Looking ahead, consumers were more pessimistic about business conditions and the labor market over the next six months. Expectations for household incomes moderated but remained optimistic overall.”

A closer look at the Expectations Index shows all three components saw decline: net expectations for business conditions dipped 2.5 percentage points (ppts) to -6.3 percent; net expectations for the labor market dropped 2.6 ppts to -11.5 percent; and net expectations for household income fell 3.1 ppts to 3.8 percent.

Consumers’ concerns about inflation continued, with 61.3 percent still anticipating higher interest rates over the next 12 months. Confidence across all age groups trended down slightly but remains highest among consumers under 35.

Here are some more highlights from this month’s report:

Present Situation

Consumers’ views of current business conditions improved slightly in August:

• 18.9 percent of consumers said business conditions were “good,” down from 19.1 percent in July.
• 17.6 percent said business conditions were “bad,” down from 17.9 percent.

Consumers’ views of the labor market improved in August, recovering to April levels:

• 27.0 percent of consumers said jobs were “plentiful,” up from 24.4 percent in July.
• Conversely, 19.5 percent of consumers said jobs were “hard to get,” down from 21.7 percent.

Expectations Six Months Hence

Consumers were less optimistic about future business conditions in August:

• 16.8 percent of consumers expected business conditions to improve, down from 17.8 percent in July.
• 23.1 percent expected business conditions to worsen, up from 21.6 percent.

Consumers were more negative about the labor market outlook in August:

• 14.6 percent of consumers expected more jobs to be available, down from 16.4 percent in July.
• Additionally, 26.1 percent anticipated fewer jobs, up slightly from 25.3 percent.

Consumers’ outlook for their income prospects was less optimistic in August:

• 17.6 percent of consumers expected their income to increase, down from 19.5 percent in July.
• 13.8 percent expected their income to decline, up from 12.6 percent.

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