Summary: US consumer confidence deteriorates sharply in August; University of Michigan index markedly below consensus figure; views of present conditions, future conditions both deteriorate again; fall only exceeded six other times in last 50 years; consistent across demographics, geographic groups; “little doubt” rise of Delta infections is driving force.
US consumer confidence started 2020 at an elevated level. However, surveys had begun to reflect a growing unease with the global spread of COVID-19 and its reach into the US by March of that year. After a plunge in the following month, household confidence recovered in a haphazard fashion, generally fluctuating at below-average levels.
The latest survey conducted by the University of Michigan indicates the average confidence level of US households deteriorated sharply in August. The University’s preliminary reading of its Index of Consumer Sentiment registered 74.1, markedly below the generally expected figure of 81.2 and much lower than July’s final figure of 81.2. Consumers’ views of current conditions and expectations regarding future conditions both deteriorated again in comparison to those held at the time of the July survey.
“Over the past half century, the Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy. The only larger declines in the Sentiment Index occurred during the economy’s shutdown in April 2020 and at the depths of the Great Recession in October 2008,” said the University’s Surveys of Consumers chief economist, Richard Curtin.
