Consumer Confidence Plunges in July as U.S. Economy Heads Wrong Way
In the month of July, the Conference Board’s Consumer Confidence Index declined nine percent from May. The index stood at 99.9 in June and plunged to 90.9 in July—the lowest level since September of 2014!
A sub-index of this confidence index, called the Expectation Index, which measures how U.S. consumers feel they will do going forward, saw a massive decline to 79.9 in July from 92.8 in June—14% month-over-month.
These large month-over-month draw-downs in U.S. consumer confidence shouldn’t be overlooked. They say U.S. consumers are anything but optimistic.
Consumer Spending Struggles
Americans are nowhere close to spending at the same level as they were before the financial crisis. According to Gallup, for the month of June, Americans’ average daily spending amounted to $90.00, hovering around that number since 2013. In mid-2008, consumers were spending close to $110.00 per day. (Source: Gallup, July 6,2015.) Consumers are spending 18% less than they did prior to the financial crisis.
Dear reader; consumer confidence is critical to economic growth. Americans have to feel good, and actually go out and spend money on things they want. Only then we will see economic growth.
Consumer spending makes up two-thirds of the U.S. economy. And if consumer confidence is negative, consumers will spend less and American companies will make less. We are seeing that right now with the unprecedented two consecutive quarters of negative revenue growth for the S&P 500 companies.
Seven months into 2015 and the Dow Jones Industrial Average sits at the lowest level from when it started the year. That pretty much explains the U.S. economy—it’s not growing.