The U.S. consumer soured on the economy this month, with confidence falling to its lowest point since last November. In all, the U.S. Conference Board, a private research organization based in New York City, reported that its monthly consumer confidence survey had fallen to a reading of just 60.6 this month, down from a downwardly revised result of 65.4 in July. Initially, the July survey had been estimated at 65.9. Expectations had been for a flattish result of 66.0 this month.
The decline reflected a dampening of hopes on the economy and job prospects. It could well be that Americans, having focused on vacations earlier in the summer, are now getting back to concentrating on the economy--and apparently do not like what they see at present.
Within the Conference Board's survey, the present situation index, a measure of the public's reading of current economic conditions, showed sentiment basically flat, with a reading of 45.8, which was down nominally from the 45.9 reading compiled a month ago. In the meantime, consumer expectations, which reflect the outlook for economic activity over the next six months, fell sharply in August, tumbling to 70.5 from 78.4 in July. Originally, that reading had been 79.1.
The prime culprit for the dampening in optimism was a decline in expectations that the job outlook will improve anytime soon. Earlier this month, the government had reported some quickening in non-farm payroll growth. We will get the next payroll reading a week from Friday. Recent weeks have seen some diminution in layoffs, as the employment situation very slowly improves. Notwithstanding that improvement, Americans remain pessimistic about their own situation with respect to job opportunities.
All in all, this was a disquieting report, and one that seems to run counter to the prevailing better news recently seen on the domestic economy. This latest metric underscores the uneven recovery now under way on the business front, and why we continue to see an understated business expansion continuing well into 2013.