Consumer confidence fell unexpectedly in the first two weeks of August to its lowest level in six years as households grew increasingly worried about the economy following a sustained surge in coronavirus cases this summer.
The Conference Board said Tuesday that its consumer confidence index, which measures how optimistic consumers feel about the economic outlook, dropped to a reading of 84.8 this month, down from 91.7 in July.
The reading is significantly lower than what analysts predicted and a drastic drop from a year ago. In August 2019, the index sat at 134.2.
The measure is a worrying sign that comes as the economy struggles to recover from a pandemic-induced recession.
“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,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.
The consumer confidence index is closely watched because consumer spending accounts for about 70% of economic activity.
Consumers’ assessment of both the present economic situation and the short-term outlook fell. The percentage of consumers who believe business conditions are “good” declined to 16.4%, while those who believe conditions are “bad” increased to 43.6%.
The share of consumers who are expecting business conditions to improve in the next six months also fell, to 30%, and the share who expect things to worsen increased slightly to 20.5%.
