MACRO: Consumer Confidence fall the lowest level since February

The Conference Board said on Tuesday its consumer confidence index dropped to 113.8 in August which is a six-month low from 129.1 in July (revised to 125.1). Today's reading came in well below analysts’ estimates of 124.0. Looking at the components, expectations fell to 91.4 from 108.4 (revised to 103.8). Present situation index plunged to 147.3 from 160.3 prior (revised to 157.2). Also it seems that US consumers are getting tired of FED's assurances that inflation is transitory as today's report showed that 1-year inflation expectations jumped to 6.8% from 6.6%, the highest since 2008!

Both University of Michigan consumer sentiment index and Conference Board consumer confidence fell sharply in recent months. Source: Bloomberg via ZeroHedge

"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. Spending intentions for homes, autos, and major appliances all cooled somewhat; however, the percentage of consumers intending to take a vacation in the next six months continued to climb. While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead" said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

Total consumer spending on goods in the US increased significantly during the pandemic, and if the situation is to normalize then a decline seems inevitable. If we also take into account the spread of the delta variant, the termination of additional employee benefits payments, then one should expect more weak readings in the future.