Consumer Short-Term Outlook Falls Below Benchmark
Signals Possible Economic Recession
The Consumer Confidence Index, compiled by the U.S. economic research organization The Conference Board and seen as a gauge of how American consumers are feeling about the economy, declined in August, according to reports on August 26 (local time).
The U.S. Consumer Confidence Index for August stood at 97.4 (with 1985 as the base year at 100), a slight decrease from the previous figure of 98.7, The Wall Street Journal (WSJ) reported. WSJ noted that this result is generally in line with expert forecasts.
The index assessing current economic conditions was recorded at 131.2, down 1.6 points. The short-term outlook indicator for consumers came in at 74.8, falling below the benchmark of 80 that signals the possibility of a recession. The survey agency explained, "When the expectations index drops below 80, it suggests a possibility of a recession."
Concerns about the labor market drove the decline in the index. The July employment report showed job gains that fell short of economists' expectations, and job growth in the previous two months was also weak. As a result, assessments of job prospects declined for the eighth consecutive month. In The Conference Board’s survey, 20% of consumers said in August that jobs were "hard to get," up from 18.9% the previous month.
The Associated Press evaluated that the decline in the Consumer Confidence Index reflects that consumers see uncertainty surrounding tariffs and jobs as sources of anxiety. Bloomberg reported that there has been an increase in mentions of consumer concerns about rising prices due to the unpredictable trade policies of the Donald Trump administration.
The Conference Board’s Consumer Confidence Index is a "soft" indicator that quantifies consumers’ survey responses. Because it reflects the sentiment of economic agents, it is used as a leading indicator for the real economy.
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