Consumers remain extremely pessimistic about the current economic environment, with the Conference Boards Consumer Confidence Index virtually unchanged in September at 45.4. While a marginal improvement from the 45.2 reading of August, it is clear that consumers remain very anxious about employment and income. The index of the current economic situation fell from 34.3 in August to 32.5 in September.
The constant drumbeat of bad economic news and the stock market volatility of the past few weeks have had an impact on Americans psyche. As to future expectations, the index rose from 52.4 to 54.0, but this was still well below the 97.5 index value observed in February.
For manufacturers, rising consumer uncertainty presents a major challenge. When consumers express anxieties about future employment and wages, they might be more likely to curtail their spending. With consumption representing around 70 percent of GDP, this provides a damper for economic growth. Just two weeks ago, for instance, the Census Bureau reported flat retail sales for the month of August. For the manufacturing industry to rebound from the current headwinds, individual and business confidence will need to pick up.
Chad Moutray is chief economist, National Association of Manufacturers.