Consumer Confidence worse than expected

Consumer confidence was again weaker than expected, falling to 50.4 in July from 52.9 in June. The present situations index deteriorated to 26.1 from 26.8 and consumer expectations declined to 66.6 from 72.7.


Consumers’ assessment of labor market conditions weakened on balance in July as although the percentage of respondents judging jobs as being “plentiful” was unchanged at 4.3%, those viewing jobs as being “hard to get” rose to 45.8% from 43.5%. Thus, the net jobs “plentiful” less jobs “hard to get” index deteriorated to -41.5 in July from -39.2% in June.

BOTTOM LINE

Although consumer confidence in some of the oil spill affected areas stabilized in July (areas covering Louisiana and Mississippi, but not Florida as sentiment in the South Atlantic region fell sharply again), confidence in some areas that held up last month declined sharply in July (most notably New England states). The consumer confidence data have been disappointing in the last two months, however, the recent pullback in sentiment is far less severe than that seen in the previous two recoveries and neither consumer spending nor overall economic activity fell back in those two episodes (also, note that weekly chain store sales have not slowed in July). Expectations for trends in consumer spending will likely be more importantly driven by next week’s employment report for July.

Source RDQ

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