Consumer Confidence Falls to Lowest Level in Two Years
JERSEY CITY, N.J. -- According to two recent reports, consumers may be reaching their breaking points as they struggle with unemployment, a faltering economy and political games in the nation’s capital.
The Conference Board's Consumer Confidence Index for August indicated that the consumer confidence index dropped 14.7 points during the month, down 24.8 percent, to reach 44.5. That is the lowest level since April 2009. In addition, the expectation index dropped 23 points, down 30.7 percent, to reach its lowest point since that time as well.
The board also found the present situation index decreased 2.4 points, down 6.7 percent; furthermore, the percentage of respondents who think that jobs are hard to get increased 49.1 percent in August vs. 44.8 percent in July.
"Consumers confidence has fallen back to recessionary levels," Chris Christopher, senior principal economist at IHS Global Insight, explained in his analysis of the report. "Americans face many headwinds and the political games and finger-pointing in Washington, D.C., over the debt ceiling added to their aggravation. The Great Recession and the aftermath were brutal to most American households."
By looking at the numbers, he added the country should expect a dismal August payroll numbers report.
The Confidence Board report is not the only indicator of unhappy consumers. "This is another bad report in a long line of gut-wrenching reports on the state of the American consumer," Christopher said.
The Reuters/University of Michigan Consumer Sentiment Index for August garnered similar results. The report found the consumer sentiment index fell eight points in August to reach 55.7 -- the lowest level since November 2008. In addition, the economic conditions index fell 7.1 points, to 68.7, and the economic outlook index decreased 8.6 points to reach 47.4.
"Consumer confidence has fallen for a third month in a row. In the past three months, consumer confidence has dropped by 25 percent," Christopher said in his analysis of the Reuters/University of Michigan report. "This is not a good thing for retailers or for the economy as a whole. Many retailers were hoping for a strong back-to-school season and consumer spending represents 70 percent of the economy."
In the middle of dealing with poor job prospects, volatile equity markets and ever-decreasing 401ks, the infighting among politicians in Washington, D.C. "was the straw that broke the camel's back," he added.
"This is bad report. No positive spin is possible. Consumers are fragile, fatigued and fed up.”