Economic confidence edges up in August
But Americans still gloomy amid a shaky recovery
NEW YORK — Americans’ confidence in the economy improved slightly in August from July, but they’re still roughly as gloomy as a year ago.
The downbeat sentiment underscores the challenges ahead for the increasingly shaky recovery and for retailers, who are grappling with a weak start to back-to-school shopping. Worries are even growing about the critical holiday shopping season.
The Conference Board, a private research group, said yesterday that its consumer confidence index rose to 53.5 from a revised 51.0 in July. Economists surveyed by Thomson Reuters had expected 50.5. The increase comes after two straight months of declines.
“The consumer is still struggling, and the prospects look like more of the same,’’ said Ken Perkins, the president of research firm RetailMetrics.
An index of 90 or more indicates a healthy economy. That level hasn’t been approached since the recession began in December 2007. The index — which measures how Americans feel about business conditions, the job market, and the next six months — had been recovering fitfully since it hit a record low of 25.3 in February 2009.
In August 2009, the index stood at 54.5, only a point higher than now. Since then, it has mostly hovered in a tight range between the mid-40s and the high 50s. May 2010 proved to be the only exception, at 62.7 — still weak.
Moreover, there doesn’t seem to be any catalyst in sight to get them to feel better any time soon. Home sales are plunging, and consumers are saving more and spending less as the unemployment rate remains stuck at almost 10 percent, all contributing to weak confidence.
Economists watch confidence closely because consumer spending accounts for about 70 percent of US economic activity and is critical to a strong rebound. But worries are rising the economy is growing too slowly to support sustained job growth.
Economists will closely watch Friday’s August employment report. They’re expect another month of tepid hiring by the private sector.