In news that will surprise exactly nobody (other than the several dozen economists whose forecasts were too upbeat), consumer confidence deteriorated further in September.
Inflation concerns and Delta variant jitters catalyzed a veritable collapse in the University of Michigan’s gauge in August, and the preliminary read for this month suggested things hadn’t improved. It followed that the Conference Board’s gauge likely didn’t perk up either.
At 109.3, the headline print for this month was well below the 115 consensus and represented a third consecutive monthly decline (figure below). The most pessimistic guess from 58 economists was 108.
The index sits at the lowest since February. Both the present situation gauge and the expectations index fell markedly.
“Consumer confidence dropped in September as the spread of the Delta variant continued to dampen optimism,” Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said.
With inflation expectations rising, spending intentions for homes, cars and major appliances all fell. Although Franco noted that near-term inflation concerns abated a bit, they’re still elevated. And while the consumer mood is still high enough “to support further growth in the near-term,” the near 20-point drop from June’s peak “suggest[s] consumers have grown more cautious and are likely to curtail spending going forward,” the color accompanying the survey said.
As ever, I’ll concede that the figure (below) is a “chart crime,” but it’s a crowd pleaser, so I keep it.
Although retail sales for August were more robust than expected, spending at restaurants and bars flatlined, underscoring concerns about consumer psychology and raising the specter of rolling retrenchments in services sector spending during virus waves.
The labor differential in the Conference Board survey fell to 42.5 from 44.4. Consumers’ outlook for business conditions in the short-term fell again in September, and labor market optimism receded.
Ultimately, the data confirmed what everyone already knew. And in this case, that’s not a good thing.
There is more going on than just covid here. Price rebound and supply chain problems are making consumers pull back too, granted that is a second order effect of covid. Well that is one way to rebuild inventories isn’t it?