Consumer Confidence: Sharp Decline in August

Bottom Line: Consumers' assessments of the economy surprised to the downside for the second straight month, decreasing sharply, with consumers stating that both business and employment conditions had deteriorated over the past month. Consumers’ optimism about the short-term outlook, and their financial prospects, also declined and continued on a downward path, hitting a new 5+ year low. While spending has remained strong, consumers remain pessimistic about the short-term outlook and concerned about the longer-term outlook. Their outlook for the labor market was also less positive. Overall, consumer confidence remains fragile, highly dependent on fiscal stimulus directed at households, and on the course of the novel coronavirus. Consumer Confidence FELL by 6.9 points in August to 84.8, compared with market expectations for an increase to 93.0. The index is now 36.8% BELOW its year-ago level. Present Situation Index FELL by 11.7 points to 84.2. The index is 52.2% BELOW its year-ago level. The Expectations Index FELL by 3.7 points to 85.2. The index is 19.9% BELOW its year-ago level. The labor differential, the percentage of respondents who said jobs are “hard to get” from the percentage who said jobs are “plentiful” , moved lower by 5.9 points to -3.7.