Color me not (at all) surprised.
Consumer confidence deteriorated in July, The Conference Board said Tuesday, flagging rising new coronavirus infections as the proximate cause behind a precipitous drop in expectations.
The headline print was 92.6 for the month, well below consensus (95.0) and closer to the bottom end of the range than the top.
Expectations tumbled all the way to 91.5 from 106.1 last month. That’s the biggest drop since March.
“The Present Situation Index improved, but the Expectations Index retreated. Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19″, Lynn Franco, Senior Director of Economic Indicators, remarked.
Again, this is the opposite of surprising. We saw University of Michigan sentiment deteriorate in the preliminary reading earlier this month. If you recall, the accompanying color was dour.
Not much needs to be said other than what should be obvious to everyone — namely that the reinstatement of lockdowns and other containment measures across the Sun Belt is leading consumers to question the viability of the recovery.
That should help prod lawmakers along in the quest to find a bipartisan solution to the stimulus stalemate.
“Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects”, Franco went on to remark Tuesday. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending”.
Indeed it does not.
You’re reminded that this comes as millions of jobless Americans are about to see their extra unemployment benefits cut by as much as two thirds. Even if Democrats manage to negotiate for a higher weekly payment, it will almost surely be lower than the $600/week which helped buoy consumption and retail sales in the wake of the lockdowns.
Just 31.6% of consumers in The Conference Board’s survey said business conditions will improve over the next six months, down sharply from 42.4% in June.
It’s coming unglued, folks. And it wasn’t fastened very tight to begin with.