U.S. consumer confidence dipped to a seven-month low in September as optimism over the economy cooled with the continued COVID-19 surge.
The Conference Board said its Consumer Confidence Index fell to 109.3 last month from 115.2 in August, the third straight monthly decline. Economists polled by Reuters had expected a reading of 114.5.
Lynn Franco, senior director of economic indicators at The Conference Board, attributed the September drop to the spread of the delta variant of the coronavirus.
“Consumer confidence is still high by historical levels — enough to support further growth in the near-term — but the index has now fallen 19.6 points from the recent peak of 128.9 reached in June,” she said in a news release. “These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward.”
The University of Michigan’s survey of consumers, however, showed sentiment stabilizing early this month and Robert Frick, corporate economist at Navy Federal Credit Union, suggested that with the current COVID wave apparently cresting, “there’s hope confidence just hit its nadir.”
“Assuming predictions of delta dropping hold true, this setback may be a three-month trough during the recovery rally,” he said.
The Conference Board also reported its measure of consumers’ assessment of current business and labor market conditions fell to 143.4 from 148.9 last month and its index of consumers’ short-term outlook for income, business, and labor market conditions dropped to 86.6 from 92.8.
“Concerns about the state of the economy and short-term growth prospects deepened, while spending intentions for homes, autos, and major appliances all retreated again,” Franco said. “Short-term inflation concerns eased somewhat, but remain elevated.”
Reuters said the survey supports “expectations for a sharp slowdown in consumer spending this quarter, which will ultimately restrain economic growth. Gross domestic product growth estimates for the third quarter are mostly below a 5% annualized rate compared with a 6.6% gain in the second quarter.
Retail sales, however, rose 0.7% in August, suggesting consumer spending — the largest component of GDP — remains robust.
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