Consumer Confidence Posts Sharp Drop
The Consumer Confidence Index fell to 76.6 in July, a seven-point drop from 83.5 in June, the New York-based business industry group said Tuesday. Analysts had expected a 1.5 percentage point increase.
"The rising level of unemployment and sentiment that a turnaround in labor market conditions is not around the corner have contributed to deflating consumers' spirits this month," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Expectations are likely to remain weak until the job market becomes more favorable."
Economists closely monitor consumer confidence because consumers spending makes up for two-thirds of all economic activity in the United States and has been a key element in keeping the struggling economy afloat.
Consumer' assessment of both current conditions and their outlook for six months from now deteriorated from last month's reading. Those rating present business conditions as "bad" increased to 30.4 percent from 28.1 percent.
However, those holding the opposite view increased to 16.3 percent from 14.9 percent. Consumers describing jobs currently as "hard to get" rose to 33.1 percent from 31.9 percent, while those claiming jobs are "plentiful" declined to 10.5 percent from 11.2 percent.
Consumers anticipating an improvement in business conditions in the next six months fell to 20.2 percent from 23.5 percent. Consumers anticipating conditions would worsen rose to 11.5 percent from 9.2 percent.
The unemployment outlook was also less bullish. Consumers anticipating more jobs to become available over the next six months declined to 16.8 percent from 18.9 percent, while those expecting fewer jobs increased to 19.8 percent from 16.9 percent. The proportion of consumers anticipating an increase in their incomes declined to 15.7 percent from 17.1 percent.