U.S. Consumer Confidence At 6-Year Low As Pandemic Drags On

U.S. Consumer Confidence At 6-Year Low As Pandemic Drags On

consumer confidence
Despite skyrocketing housing and stock markets, consumer confidence is weakening as the coronavirus continues to drag on the economy. Photo by Christian Wiediger on Unsplash

Consumer confidence is weakening as the coronavirus pandemic continues to batter workers in the U.S. economy, more companies announce layoffs and people become despondent about the scarcity of jobs, Bloomberg reported.

How optimistic or pessimistic people are about their expected financial situation is assigned a number on the Consumer Confidence Index that indicates the overall state of the economy.

If consumers are optimistic, they will spend more and stimulate the economy but if they are pessimistic, they’ll spend less. That’s the premise for the Consumer Confidence Index, and it’s not looking good for the fourth quarter.

Consumer confidence dropped unexpectedly in August to the lowest since 2014. The Conference Board’s index decreased from 91.7 in July to 84.8 in August — the lowest level since the pandemic began, according to a report on Tuesday. Bloomberg analysts had predicted a reading of 93 in August.

“The low readings on consumer confidence have persisted despite the skyrocketing housing and stock markets, which typically boost sentiment by driving the wealth effect,” wrote Axios editor Dion Rabouin, author of “Markets.”

The S&P 500 has risen for five straight months and is up nearly 50 percent. Housing prices continue to rise. This suggests an increasing disconnect between markets and the economy, Rabouin wrote.

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Consumers say that both business and employment conditions have deteriorated over the past month, said Lynn Franco, senior director of economic indicators at the Conference Board, in a press release.

U.S. consumer spending has been supported by government fiscal and monetary assistance, but assistance has run out for millions of unemployed who now have $600 less per week, Axios reported.

The report points to a bumpy economic recovery — and risks for President Donald Trump’s re-election, Olivia Rockeman wrote for Bloomberg.

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