Consumer Confidence Index Falls in August: Dr. Joe Webb Comments
Press release from the issuing company
August 31, 2004 -- (WhatTheyThink.com) -- The Conference Board’s Consumer Confidence Index, which had been on the rise since April, declined in August. The Index now stands at 98.2 (1985=100), down from 105.7 in July. The Expectations Index dropped to 96.6 from 105.3. The Present Situation Index fell to 100.7 from 106.4.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS NFO. TNS NFO is one of the TNS Group of companies. The cutoff date for August’s preliminary results was August 24th.
Consumers Turn Cautious Again
"The slowdown in job growth has curbed consumers’ confidence," says Lynn Franco, Director of The Conference Board’s Consumer Research Center. "The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail."
Consumers’ assessment of current conditions was less upbeat than last month. Those saying business conditions are "good" declined to 23.2 percent from 25.2 percent. Those claiming conditions are "bad" rose to 20.1 percent from 19.1 percent. Consumers saying jobs are "plentiful" decreased to 18.1 percent from 19.7 percent. Those claiming jobs are "hard to get" was virtually unchanged at 25.8 percent, compared to 25.7 percent in July.
Consumers have reduced expectations for the next six months. Those anticipating conditions to worsen increased to 8.8 percent from 7.1 percent. Those expecting business conditions to improve declined to 20.1 percent from 23.0 percent last month.
The employment outlook for the next six months was also less favorable. Consumers expecting fewer jobs increased to 15.4 percent from 13.5 percent. Those anticipating more jobs to become available fell to 16.2 percent from 19.5 percent. Consumers expecting their incomes to improve in the months ahead rose to 19.3 percent from 18.0 percent last month.
Dr. Joe Webb Comments:
This Conference Board report reflects a slowing of growth of the economy, as shown in second quarter GDP, but other indicators are already showing improvement. Monday's personal income report showed an increase in consumer spending, and that's the most important sign of consumer confidence of all, as consumers dipped into savings, something they don't do lightly. Media reports of runaway oil prices did not help, even though prices actually need to double to reach historical highs in inflation-adjusted terms. Do not mistake this report as a downturn; it's still higher than May and preceeding months. Growth is still here, and third quarter GDP will be higher than last quarter's.
Premium Access Members at WhatTheyThink.com can view more analysis in Dr. Joe Webb’s weekly column on Friday, appropriately called "Fridays with Dr. Joe".
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