Consumer Confidence Still in Recession Territory
NATIONAL REPORT -- Americans are feeling slightly more pessimistic about their current financial and economic situation, but their outlook for the next six months has significantly improved, according to The Conference Board's Consumer Confidence Index for July.
Although consumer confidence is still in recession territory, the July index increased for the first time in five months. The expectations index also increased 5.7 points to reach 79.1.
On the other hand, the present situation index declined a bit, and the labor index -- percentage of respondents who think jobs are plentiful minus the percentage of respondents who think jobs are hard to get -- also fell this past month.
Overall, this is welcome news, albeit not a "good report," said Chris G. Christopher Jr., senior principle economist at IHS Global Insight. "Consumer confidence stopped digging deeper into recession territory. The downward slide has been reversed, thank goodness."
In related news, the July Reuters/University of Michigan Consumer Sentiment Index also remains in recession territory. This index dropped 0.9 points to 72.3, the lowest reading this year. The expectations index also fell 2.2 points to reach 65.6.
Recent evidence has not been very impressive on the consumer front. Payroll growth is anemic, chain store numbers are troubling and consumer mood is depressed, Christopher said.
"This is not a good report. It is obvious that American consumers are not in a cheerful mood. This is not comforting for retailers as we are currently in the back-to-school season," he added. "In addition, the Midwest drought will cause food prices to increase, swallowing more of households’ fragile budgets. The American consumer is in a fragile and fickle state of affairs. We do not expect consumer mood to show any significant improvement in the coming months."
The Conference Board's Consumer Confidence Index is based on a monthly survey of 5,000 households. The Reuters/University of Michigan Consumer Sentiment Index is based on a monthly survey of at least 500 telephone interviews in the United States, excluding Alaska and Hawaii.