U.S. consumer confidence fell in August to its lowest level since 2014, according to the Conference Board.
The consultancy said its Consumer Confidence Index was 84.8 in August, down from 91.7 in July. Its Present Situation Index, which is based on consumers’ assessments of current business and labor market conditions, fell even more sharply, from 95.9 to 84.2 for the month.
“Consumer confidence declined in August for the second consecutive month,” Lynn Franco, senior director of economic indicators at the company, said in a statement. Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead.”
Franco said consumers’ optimism about their short-term financial outlooks continued on a downward path.
Results of the monthly survey come even as the Census Bureau reported sales of new single-family homes rose 14% from June to July and 36% year-over-year.
“Today’s data is telling us that while some lucky workers are able to buy new homes, millions of others are unable to afford life’s necessities and pay the rent especially after the federal government canceled those $600 checks,” Chris Rupkey, chief economist at MUFG in New York, said.
“The consumer is the most worried they have been all year, which pours cold water on the idea that the economic recovery is sustainable.”
Meanwhile, economists said a cut to the weekly unemployment supplement is likely to reduce retail sales by about $50 billion in August.
“We are clearly in the second phase of the recovery, driven by underlying fundamentals rather than purely the surge in activity as household reengaged,” James Knightley, chief international economist at ING in New York, said. “This reinforces our view that a V-shaped recovery will not happen, the U.S. economy is unlikely to recover all of its lost output until mid-2022.”
U.S. GDP fell at its sharpest rate in 73 years during the second quarter. Economists say the economy has been in recession since February.
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