July consumer confidence drops amid new outbreaks

Consumer confidence took a dive in July as new coronavirus outbreaks emerged in several states, according to The Conference Board.

The company’s Consumer Confidence Index dipped to 92.6, down 5.7 points from June’s 98.3 level. The index remains above the roughly 85 level from April and May, but well below the levels in the low 130s reached before the pandemic.

“Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19,” said Lynn Franco, senior director of economic indicators at The Conference Board.

The monthly survey actually saw a 7.5-point increase in what consumers thought about their current business and labor market conditions, but their expectations for the future of the recovery were severely dampened, falling 14.4 points.

“Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects,” Franco said.

“Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending,” she said.

Consumption accounts for over two-thirds of the U.S. economy, so drops in confidence can have serious implications for growth and economic activity.