Retailer Daily

Consumer Confidence Index Dips

Following two months of dramatic growth, the Conference Board Consumer Confidence Index has slightly fallen. The Index stands at 49.3 for June, down from an adjusted score of 54.8 for May. The Consumer Confidence Index, based on the Conference Board’s Consumer Confidence Survey, consists of the Present Situation Index, which decreased from 29.7 in May to 24.8 in June, and the Expectations Index, which decreased from 71.5 in May to 65.5 in June Brief highlights from each index follow.

Present Situation Index

The percentage of consumers rating current business conditions as “bad” increased from 44.5% in May to 45.6 in June, while the percentage rating current business conditions as “good” decreased from 8.8% to 8%. The percentage of consumers who think jobs are hard to get increased from 43.9% to 44.8%, while those who think jobs are “plentiful” decreased from 5.8% to 4.5%.

Expectations Index

Consumers’ expectations for the next six months also took a downturn in June. The percentage of consumers anticipating an improvement in business conditions during the next six months decreased from 22.5% to 21.2%, while those expecting conditions will worsen increased from 18% to 20.2 %. Consumers also took a more pessimistic job outlook for the next six months. The percentage of consumers anticipating more jobs in the months ahead decreased from 19.3% to 17.4%, while those anticipating fewer jobs increased from 25.6% to 27.3%. The percentage of consumers expecting an increase in their incomes declined from 10.8% to 9.8%. Lynn Franco, director of the Conference Board Consumer Research Center, said consumers’ less favorable assessment of present and future business conditions and employment implies the economy is still weak. “Looking ahead, (consume expectations) continue to suggest less negative conditions in the months ahead, as opposed to strong growth," said Franco. Despite the drop in consumer confidence levels, there have been recent signs of economic improvement. Consumer spending, personal income and disposable personal income all rose in May 2009, although consumer saving levels also significantly increased. In addition, growth of the national trade deficit dropped by roughly 50% between March and April 2009. However, there have also been recent negative economic signals. The Restaurant Performance Index slid from 98.6 in April 2009 to 98.3 in May 2009, reversing five months of growth. In addition, U.S. unemployment hit 9.4% last month. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for June’s preliminary results was June 23, 2009. The next release is scheduled for Tuesday, July 28, 2009.