Consumer Confidence Plummets
-- July 29, 2003
US consumer confidence took a dive in July as unemployment woes continue to plague the economy. The Conference Board's Consumer Confidence Index fell 10% to 76.6 in July from 83.5 in June. Not only is this far below expectations, it's also the lowest reading in four months.
It's no wonder why consumers are so weary. Unemployment claims, which hit a nine-year high of 6.4% in June have consistently remained above the 400,000 threshold, signaling weakness. And even though jobless claims dipped under the 400,000 mark last week, July data is always shaky due to seasonal auto-manufacturer shutdowns and startups. So, we expect the unemployment lines will get longer.
Furthermore, the weak job market will continue to weigh on consumer confidence for months to come. The number of consumers anticipating an increase in jobs in the next six months dropped to 16.8% from 18.9%. Nearly 20% expect fewer jobs will be available. People are terrified they'll lose their jobs.
Plus, consumers are concerned that an overall economic recovery just won't happen. The present-conditions index fell to 61.9 from 64.2, while the expectations index fell to 86.4 from 96.1.
The bottom line is that falling consumer confidence hurts consumer spending. Since consumer spending accounts for two-thirds of ALL economic activity in the United States, curtailed spending is a massive stumbling block for the tripping economy.
related article: Consumer Confidence Crumbled In July