Wednesday, July 29, 2009

Consumer Confidence Drops

From the Conference Board:

The Conference Board Consumer Confidence Index™, which had retreated in June, declined further in July. The Index now stands at 46.6 (1985=100), down from 49.3 in June. The Present Situation Index decreased to 23.4 from 25.0 last month. The Expectations Index declined to 62.0 from 65.5 in June.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months. The decline in the Present Situation Index was caused primarily by a worsening job market, as the percent of consumers claiming jobs are hard to get rose sharply. The decline in the Expectations Index was more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions, as opposed to an increase in the percent of consumers expecting conditions to deteriorate further. However, more consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead."

These set of figures was one of the first economic indicators that caught my eye roughly two months ago. The trends then were positive. Now they are negative. Here are the charts from

As the Conference Board indicates, this comes down to the job market. While the initial unemployment claims data is positive, the public needs to see an improvement in the establishment survey now. That means the next employment report is that much more crucial.