US consumer confidence in flat over 6 years old; highlights fear about economic recovery

By Lucia Mutikani

WASHINGTON, Aug 25 (.) – U.S. consumer confidence fell to a more than six-year low in August as households worried about the labor market and incomes, raising questions about the sustainability of the economic recovery after the recession caused by COVID-19.

The second month in a row was a decline in consumer confidence reported Tuesday by the Conference Board, overshadowing an acceleration in sales of new single-family homes to highs of more than 13½ years in July. The housing market continues to show strong immunity to the coronavirus crisis.

The drop in confidence came after the end of a $ 600 weekly unemployment benefit on July 31 and an increase in new coronavirus infections in the country, forcing some jurisdictions to close businesses again or pause businesses. scheduled reopenings.

“Today’s data (Tuesday) tells us that while some lucky workers can buy new homes, millions of others cannot afford the necessities of living and pay rent, especially after the federal government canceled those $ 600 checks. “said Chris Rupkey, chief economist at MUFG in New York.

“The consumer has been the most concerned throughout the year, which throws cold water on the idea that the economic recovery is sustainable,” he added.

The Conference Board said its consumer sentiment index fell to a reading of 84.8 this month, the lowest since May 2014, from 91.7 in July. Economists polled by . predicted the index would rise to 93 in August.

The current situation measure, based on consumers’ assessment of current business and labor market conditions, fell to 84.2 this month from 95.9 in July. The expectations index based on consumers’ short-term outlook for income, business and labor market conditions dropped to 85.2 from 88.9 in July.

The proportion of consumers expecting an increase in revenue fell to 12.7% this month from 14.8% in July and the proportion anticipating a drop rose to 16.6% from 15.8% last month.

The economy went into recession in February. The Gross Domestic Product contracted in the second quarter at its steepest rate in at least 73 years.

In a separate report Tuesday, the Commerce Department said new home sales rose 13.9% to a seasonally adjusted annual rate of 901,000 units last month, the highest level since December 2006. New home sales they are counted when signing a contract, making them a leading indicator of the housing market.

Economists had forecast that new home sales, which account for about 13% of market sales, would rise 1.3% at a rate of 785,000 units.

The housing market is being driven by historically low interest rates and a migration to low-density residential areas as businesses allow employees to work from home.

(Report by Lucia Mutikani, Edited in Spanish by Manuel Farías)