Yahoo Finance The final look at a consumer summer swoon
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Wednesday, September 1, 2021
Consumer confidence dropped in August. That might be the worst of it.
The Conference Board's look at consumer confidence in August told us what we already knew: the pandemic has been a drag on the American public's sentiment.
In the waning weeks of summer, the index fell to 113.8, below the 125.1 reported in July and well under the 123 figure expected by economists in a consensus forecast.
“Consumer confidence retreated in August to its lowest level since February 2021,” said Lynn Franco, senior director of economic indicators at The Conference Board.
“Concerns about the Delta variant — and, to a lesser degree, rising gas and food prices — resulted in a less favorable view of current economic conditions and short-term growth prospects," Franco added.
Earlier this week, we noted that actual spending data from consumers belies the lack of confidence these survey reports suggest, serving as a reminder that an uneven recovery does not mean a forestalled one.
"In our proprietary data, we see a modest softening, especially in the service sector," Joe Song, an economist at Bank of America Global Research, told Yahoo Finance Live on Tuesday. "But it's starting to stabilize to a certain extent. It does feel like maybe we've come to the bottom of it."
Song added that "even though these economic data are starting to slow down... they're still well above levels we saw at the start of the year."
A similar view was reflected in work from Aneta Markowska and the economics team over at Jefferies, who in a note published earlier this week highlighted a flattening in economic activity over the last few months. But a flattening likely to end as COVID cases wane this fall.
"It's clear that the Delta variant is the main culprit behind the recent stall in activity," Jefferies wrote. "The weakness over the past 8 weeks has been concentrated in high contact activities, including restaurant bookings, consumer foot traffic, flight activity, and hotel occupancy."
But with COVID cases potentially set to begin falling in the coming weeks, the firm expects the economy will accelerate into the holiday season — something we know retail experts are bullish on.
"With the rate of new infections now projected to peak in the third week of September," Jefferies writes, "we expect service activity to reaccelerate in October as schools and offices reopen, and business travel & entertainment gradually resumes."
By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland
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