The consumer confidence index is closely
watched for signals it can send about future
consumer spending, which accounts for 70% of
economic activity.
The Conference Board said that the large decline
in the expectations index reflected big drops
in sentiment in Michigan, Forida, Texas and
California, all states that have seen a resurgence
in coronavirus cases.
About 4.2 million confirmed COVID-19 cases
have been reported in the United States,
according to Johns Hopkins University, and
there have been more than 146,000 deaths.
“Consumers have grown less optimistic about
the short-term outlook for the economy and
labor market and remain subdued about
their financial prospects,” said Lynn Franco,
senior director of economic indicators at the
Conference Board.
“Such uncertainty about the short-term future
does not bode well for the recovery, nor for
consumer spending,” he said.
Robert Frick, an economist at Navy Federal
Credit Union, said the big drop in consumer
expectations could reflect the fact that many
Americans see a fiscal cliff looming.
“More consumers see drops in business
conditions and more see fewer jobs ahead,” he
said. “The jobs market is slowing, and may be
stalling due to the rise in COVID-19 infections
and bankruptcies.”
The overall index stood at a high for this year
of 132.6 in February before the pandemic
forced shutdowns across the country in March
and April.