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Economy in Brief

U.S. Consumer Confidence Falls Sharply
by Tom Moeller  August 28, 2012

Consumers' confidence about the future has turned sour. In fact, lower expectations for the next six months helped push the Conference Board's Consumer Confidence Index for August down by 7.3% m/m to 60.6 from 65.4 in July, initially reported as 65.9. Consensus had been looking for an August reading of 66.0. During the last ten years there has been a 47% correlation between the level of confidence and the three-month change in real PCE.

The expectations component, by itself, fell 10.1% to 70.5 which was its lowest level since November. A diminished 16.5% of respondents thought business conditions would be better six months hence. Also lower were the 15.4% who thought there would be more jobs and the 15.7% who expected higher income.

Consumers' reading of the present situation fell minimally m/m to 45.8 but still was up one third y/y. An improved 15.2% saw business conditions as good while a slightly lower 40.7% reported that jobs were hard to get.

Expectations for inflation in the next twelve months rose m/m to 5.9%, its highest level since March. The percentage of people looking for higher stock prices ticked up to 26.8% this month but the percent who are bearish also rose. The percentage of respondents planning to buy a home within six months rose to its highest level this year and the percent planning to buy a major appliance held high and steady.

Headline figures on consumer confidence are carried in Haver's USECON database. The Conference Board's detailed data are found in Haver's CBDB database, and the consensus expectations figure is from Actions Economics, as tabulated in the AS1REPNA database.


Conference Board (SA, 1985=100) Aug Jul Jun Y/Y % 2011 2010 2009
Consumer Confidence Index 60.6 65.4 62.7 34.1 58.1 54.5 45.2
Present Situation 45.8 45.9 46.6 33.5 36.2 25.7 24.0
Expectations 70.5 78.4 73.4 34.5 72.8 73.7 59.3
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