August 1, 2001
Consumer Confidence Falls as Spending Increases
Consumer confidence declined in July for the first time since April, though consumer spending increased slightly during the month. The Conference Board reported Tuesday the Consumer Confidence Index fell to 116.5 from 118.9 in June, and the U.S. Department of Commerce reported consumer spending increased 0.4% rather than 0.3% as expected.
The Conference Board's Present Situation Index declined from 156.8 in June to 152 in July, and the Expectations Index fell to 92.9 from 93.5 in June. Consumers' assessment of current economic conditions was less upbeat as well. The number of people rating current business conditions as bad rose from 12.6% to 14.4%.
"The moderate decline in confidence signals show economic growth ahead," says Lynn Franco, director of the Conference Board's Consumer Research Center. " The Present Situation Index, which is still historically high, suggests consumer spending will hold at or near current levels. Despite sluggish economic conditions and almost non-stop layoff announcements, consumers are cautiously optimistic that the economy will rebound later this year."
- by Julia M. Duncan