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Economy in Brief

U.S. Consumer Confidence Declines Sharply During August
by Tom Moeller  August 31, 2021

• Confidence weakens as Delta variant worries emerge.

• Appraisal of current conditions and expectations plunge.

• Job market indexes fall.

The Conference Board Consumer Confidence Index plunged 9.0% (+31.9% y/y) this month to 113.8 from 125.1 in July, revised from 129.1. A decline to 123.2 had been expected in the Action Economics Forecast Survey. The confidence index stood at the lowest level since February.

The Conference Board stated, "Concerns about the Delta variant and -- to a lesser degree, rising gas and food prices -- resulted in a less favorable view of current economic conditions and short-term growth prospects."

The Present Situation index declined 6.3% this month (+71.7% y/y) to 147.3 from 157.2 in July, revised from 160.3. The Consumer Expectations reading weakened 11.9% (+5.5% y/y) to 91.4 from 103.8 in July, revised from 108.4.

The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, fell to 42.8% from 44.1% in July, revised from 44.4%. This series has had a 73% correlation with the unemployment rate over the last ten years. The jobs plentiful measure eased this month to 54.6% after surging in July to a near record high in July. The jobs hard-to-get index edged higher for the second straight month, but remained near the record low.

Business conditions were perceived as good by a greatly lessened 19.9% of respondents in August, down from a high of 25.2% in June. Expectations that business conditions would improve in six months plummeted to 22.9% from 30.9% in July. More jobs were expected in six months by a 23.0% of respondents, down from 29.9% twelve months ago. The percentage expecting income to increase fell to 17.9%, the least in three months.

The expected inflation rate in twelve months surged to 6.8%, up from a 4.4% low in January of last year. It was the highest level since October 2008. The share of respondents planning to buy a new home within six months eased to 0.5% and remained down from 2.0% last June. Those planning to buy a major appliance fell moderately to 50.2%, but remained up from 44.9% twelve months ago.

Confidence of individuals under 35 years fell sharply m/m, but the index remained up nearly one-half  y/y. Confidence amongst individuals 55 and over also fell sharply to the lowest level since March. Confidence amongst those between 35 and 54 fell moderately.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.

Effects of Asset Valuations on U.S. Wealth Distribution from the Federal Reserve Bank of San Francisco can be found here.

Conference Board (SA, 1985=100) Aug Jul Jun Aug '20 2020 2019 2018
Consumer Confidence Index 113.8 125.1 128.9 86.3 101.0 128.3 130.1
   Present Situation 147.3 157.2 159.6 85.8 109.8 169.8 164.8
   Expectations 91.4 103.8 108.5 86.6 95.2 100.6 107.0
Jobs Gap (%) 42.8 44.1 44.2 -2.2 6.8 33.2 27.6
   Jobs Plentiful (%) 54.6 55.2 54.7 21.4 27.8 45.8 42.0
   Jobs Hard to Get (%) 11.8 11.1 10.5 23.6 21.0 12.6 14.4
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