US consumer confidence drops for 2nd straight month as virus cuts deeper into spending and hiring

• The Conference Board's Consumer Confidence Index has fallen for the second straight month, to 84.8 from 91.7, according to a Tuesday release.
• The group's Present Situation Index — which tracks Americans' views of current business and job-market conditions — sank to 84.2 from 95.9.
• Data was gathered until August 14, soon after daily new COVID-19 cases began falling from their late-July peak.
• The gloomy report "does not bode well for Q4 consumption, if Congress does not get its act together" and pass new fiscal stimulus, Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said.

The ongoing spread of US coronavirus infections further slammed consumer sentiments in August as joblessness maintained historic highs and spending slowed its recovery.

The Conference Board's Consumer Confidence Index this month sank to 84.8 from 91.7, notching its second consecutive drop. The organization's Present Situation Index — which tracks Americans' views of current business and job-market conditions — fell to 84.2 from 95.9. The gauge for consumers' short-term outlook fell to 85.2 from 88.9.

The survey gathered data until August 14, soon after daily new cases in the US began falling from their late-July peak. The spike in outbreaks quickly showed up in high-frequency indicators, with weekly jobless claims and credit-card spending data reflecting a weakening recovery.

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"Consumer spending has rebounded in recent months, but increasing concerns among consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead," Lynn Franco, the senior director of economic indicators at The Conference Board, said in a statement.

The share of respondents deeming business conditions "good" fell to 16.4% from 17.5%, and those calling the situation "bad" rose to 43.6% from 38.9%. The proportion of Americans expecting the economy to decline in the short term ticked slightly higher.

Americans saying jobs are "hard to get" jumped to 25.2% from 20.1%, signaling fresh weakness in the labor market after months of payroll increases.

Back-to-back months of declining confidence are unlikely to drive a major loss in third-quarter consumption, Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a note. Yet the gloomy figures could foreshadow a dim end of the year, the economist added.

"This does not bode well for Q4 consumption, if Congress does not get its act together" and pass new fiscal stimulus, Shepherdson said.

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