Consumer Optimism Declines on Economic Worries

By June 26, 2012Economy

The Conference Board reported that consumer confidence index declined from 64.4 in May to 62.0 in June. This was the fourth consecutive monthly decrease, as the measure stood at 71.6 in February. This month’s lower figure fell mainly on worries about where the economy was headed, with the expectations component falling from 77.3 to 72.3.

The net percentage of respondents expecting higher income declined this month, for instance. Ironically, Americans were more positive about present conditions, as this measure rose from 44.9 to 46.6.

Despite the decline in this measure since February, it is important to point out that consumer confidence remains higher than it was last fall, when it bottomed out near 40 in October. Still, we would not want the recent weaknesses to be a sign that consumers are pulling back on spending.

Consumers have had to balance the benefits of falling energy prices, which normally would have lifted confidence, with continued anxieties about the global economic outlook, particularly with the European crisis being an almost daily headline. These worries have taken their toll, and the real concern is that pessimism creeps into consumers’ desires to spend. Personal consumption was the main driver of growth in real GDP in the first quarter, and any let-up in this will slow domestic growth.

In this survey buying intentions were mixed. There was a slight increase in the percentage of respondents planning to purchase a home, but appliance spending plans declined. Those intending to buy a new automobile were unchanged from May.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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