With a plunge of 13.4% compared to the previous month, the level of consumer confidence is back below that of April 2020.
US consumer confidence for August plunged to its lowest level in ten years, affected by the shadow of the Delta variant on the economy and inflation fears, according to the final estimate of the University of Michigan survey published Friday. The index stands at 70.3 points, very close to the preliminary estimate of 70.2 points, and lower than analysts’ expectations of 70.7 points.
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This index is at its lowest since December 2011 and it is the seventh worst monthly figure since 1978. “Collapse in confidence reflects emotional reaction, due to dashed hopes that the pandemic will end soon», Underlines Richard Curtin the chief economist in charge of the monthly survey, very followed by the markets. The Delta variant of Covid-19 is still wreaking havoc around the world and preventing a vigorous economic recovery.
With a plunge of 13.4% compared to the previous month, the level of consumer confidence thus falls below the level of April 2020, during the outbreak of the Covid-19 pandemic. As for inflationary fears, prices continued to climb in July in the United States compared to last year, with the PCE index standing at 4.2% against 4% in June. For the second quarter as a whole, one-year inflation had reached its fastest pace since 1982, at 6.5%.
A strong improvement in the labor market in July
PCE inflation is that used by the US Central Bank (Fed) to determine the stance of its monetary policy. In the consumer confidence index, the decline is particularly pronounced in consumer expectations and income prospects.
Published Thursday, the statistics on weekly jobless claims resumed a small increase in mid-August in the United States, after four weeks of decline, according to statistics from the Department of Labor. Despite this rather gloomy picture, “we believe future readings will be more lenient when inflationary pressures have likely peaked and fewer people are affected by the Delta variant», React the economists of Oxford Economics.
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The job market improved sharply in July, with 943,000 jobs created. However, 5.7 million are still missing compared to February 2020, before the pandemic. The August unemployment rate will be released on September 3.
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