US consumer confidence dims in July as Covid-19 pandemic intensifies

WASHINGTON: US consumer confidence deteriorated in July as the coronavirus pandemic intensified, with the short-term outlook for business conditions, earnings and employment all worsening, according to a key survey released on Tuesday.

The Conference Board research firm said its consumer confidence index fell to 92.6 from 98.3 in June, worse than analysts expected amid a surge in coronavirus cases nationwide that has hampered the tentative economic recovery.

"Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labour market and remain subdued about their financial prospects," said Lynn Franco, The Conference Board's senior director for economic indicators.

"Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending."

The index shot up more than 12 points in June as states lifted lockdowns meant to stop Covid-19 from spreading.

The reopening of businesses has boosted economic activity in recent months, but left the country struggling to contain the resurgence in new cases of the coronavirus, forcing some authorities in the hard-hit South and West regions to either close businesses again or halt reopenings.

"Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of Covid-19," said Franco.

The expectations index gauging consumers' short-term outlook plunged to 91.5 in July from 106.1 in June, with less than a third of respondents expecting conditions to get better in the next six months.

Ian Shepherdson of Pantheon Macroeconomics said future expectations are primed for another hit thanks to the surge in cases, "which has peaked but is unlikely to fall far enough over the next few weeks to prevent another drop in the index in August."

And Shepherdson warned the index could worsen further if expanded unemployment benefits included in the US$2.2 trillion (RM9.35 trillion) CARES Act rescue package are allowed to expire at the end of July.

Republicans and Democrats in Congress are currently locked in debate over the best plan to support the economy, with Republicans favoring a sharp decline in expanded jobless benefits.

The Conference Board said the present situation index measuring views on employment and business conditions rose in July to 94.2 from 86.7.

The number of consumers saying business conditions were "good" was relatively steady at 17.3% while those saying they were "bad" fell in July to 39.1%.

People saying jobs were "plentiful" also increased slightly while those saying they were "hard to get" decreased more than three percentage points.

The share of consumers expecting an increase in income was little changed at 15.1% this month and the proportion anticipating a drop rose to 15.0% from 14.1%. – AFP, Reuters

source https://www.thesundaily.my/business/us-consumer-confidence-dims-in-july-as-covid-19-pandemic-intensifies-GY3199008