U.S. consumer confidence retreats in August

Consumer confidence fell in August, erasing back-to-back increases in June and July amid renewed concerns about inflation. 

The Conference Board Consumer Confidence Index  fell in August to 106.1 from a downwardly revised 114.0 in July.  The headline number reflected dips in both the current conditions and expectations indexes .

“Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,”said Dana Peterson, chief economist at The Conference Board.

The pullback in consumer confidence was evident across all age groups — and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000.  Confidence held relatively steady for consumers with incomes between $50,000 and $99,999. 

The Present Situation Index—based on consumers' assessment of current business and labor market conditions—fell to 144.8 from 153.0. 

“Assessments of the present situation dipped in August on receding optimism around employment conditions: fewer consumers said jobs are "plentiful" and more said jobs are "hard to get," ’said Peterson. “Hard data confirm that employment gains have slowed, overall wage increases are less generous compared to a year ago, and the average number of weeks of unemployment is ticking upward.”

The Expectations Index — based on consumers' short-term outlook for income, business, and labor market conditions—declined to 80.2 in August, reversing July's sharp uptick to 88.0.  

“Expectations for the next six months tumbled back near the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes,” said Peterson. “Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive. Notably, expectations for interest rates jumped in August after falling two months ago.”

On a six-month moving average basis, plans to purchase autos and appliances continued to trend upward but plans to buy homes —more in line with rising interest rates —continued to trend downward. 

The dip in overall confidence notwithstanding, consumer plans to go on vacation, especially abroad, leapt upward in the month and slightly exceeded August 2022 readings, suggesting a continued penchant for spending on services, noted Peterson.

More findings from the August report are below.

Present Situation

Consumers' assessment of current business conditions was slightly less positive in August.

• 20.7% of consumers said business conditions were "good," unchanged from July.
• 17.2% said business conditions were "bad," up from 16.2%.

Consumers' appraisal of the labor market deteriorated in August.

• 40.3% of consumers said jobs were "plentiful," down from 43.7% in July.
• 14.1% of consumers said jobs were "hard to get," up from 11.3%.

Expectations Six Months Hence

Consumers were less optimistic about the short-term business conditions outlook in August.

• 16.2% of consumers expect business conditions to improve, down from 17.2% in July.
• Meanwhile, 16.8% expect business conditions to worsen, up from 14.5%.

Consumers' assessment of the short-term labor market outlook was less favorable in August.

• 16.7% of consumers expect more jobs to be available, down slightly from 16.6% in July.
• 18.0% anticipate fewer jobs, up from 15.6%.

Consumers' short-term income prospects worsened in August.

• 16.5% of consumers expect their incomes to increase, down from 17.8% in July.
• 12.4% expect their incomes will decrease, up from 9.9%.

Consumers' assessment of their Family's Current Financial Situation turned less positive in August.

Consumers' assessment of their Family's Expected Financial Situation, Six Months Hence softened in August.

Consumers' Perceived Likelihood of a US Recession over the Next 12 Months ticked down in August to the lowest level recorded thus far in 2023.

The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was August 20.