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 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 labor 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.
But the reopenings have led to an increase in cases, particularly in the southern and western United States.
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 $2.2 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 percent while those saying they were “bad” fell in July to 39.1 percent.
People saying jobs were “plentiful” also increased slightly while those saying they were “hard to get” decreased more than three percentage points.