Consumer Confidence Measures Mostly Lower Again

The two leading measures of consumer confidence moved in opposite directions again in August, as consumer expectations and spending plans remain quite negative. The Thomson Reuters/University of Michigan Consumer Sentiment Index rose slightly while the Consumer Confidence Index maintained by The Conference Board fell. The expectation measures from both research groups were lower. Uncertainty about tax and fiscal policy remains a major factor, clouding the economic outlook for many consumers.

Noting that the Consumer Confidence Index in August reached its lowest level since last November, The Conference Board’s Director of Economic Indicators Lynn Franco said “a more pessimistic outlook was the primary reason for this month’s decline in confidence.”

Richard Curtin, chief economist at U.M.’s Surveys of Consumers, said a “major source of uncertainty is about when the fiscal cliff will be bridged, and who will bear the burden of the tax increases and the spending cutbacks.” And he noted that aside from the past three years, the average level of consumer confidence in 2012 has been the lowest since 1982. “The uncertainty will increasingly cause consumers to become cautious spenders,” he said, adding that while some worry about the negative impact on spending from upper income consumers, the spending of every worker is threatened by the end of the payroll tax cuts in January.”