Coronavirus Cases Up, Consumer Confidence Down

Consumer confidence fell in July. On Tuesday, the Conference Board announced that the index fell to 92.6 in July, down from 98.3 in June. There’s been growing evidence that the economy is slowing again, after an initial growth spurt in May and June. 

The source of the problem is, of course, that coronavirus cases are rising again. As of today (Tuesday), there are 4.4 million confirmed cases of the coronavirus in the United States, with 151,000 deaths. 

The present situation index, which measures consumer views on current business and employment conditions, rose to 94.2 in July, from 86.7 in June. But the future expectations index declined from 106.1 in last month to 91.5 at present. Consumers seem to feel stable enough for now, but do not appear to expect that to continue. Expectations for an increase in income was unchanged from last month at 15%. Respondents expecting a drop in income grew from 14.1% in June to 15% now.

32% of those surveyed expect better conditions and more jobs in the next six months (last month, that percentage was 42%). Job availability expectations declined to 31%, from 38.4% in June. This is consistent with unemployment trends. After close to four months of decreasing unemployment claims, new filings turned back up in the most recent data available. 

Plans to buy durable goods like autos and appliances also fell. This comes one day after the Commerce Department reported that durable goods sales had finally recovered.

Consumer confidence trends are reflective of economic conditions on a large scale. Businesses began reopening across the country in June, which unfortunately brought with it a new spate of infections. Now, reopenings are slowing down, forcing businesses to close a second time. Confidence fell particularly far in states where the virus is spreading, like Texas, California, Florida, and Michigan. Perhaps that should not come as a surprise.
‘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,’ Lynn Franco, the Conference Board Director of Economic Indicators, said in a statement. ‘Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.’