In June 2010, the estimate of US consumer confidence, as measured by the Conference Board, plunged to 52.9 index points, from a revised 62.7 in May 2010. The market was expecting the confidence index to fall marginally to 62.5. The cut-off date for the survey was 22 June 2010.
The Present Situation Index fell to 25.5 from 29.8 in May 2010; which is obviously extremely low by historical standards. The key expectations index also fell sharply in June to 71.2 from 84.6 (the long-term average for the expectations index is around 92).
According to the Director of The Conference Board Consumer Research Center: "Consumer confidence, which had posted three consecutive monthly gains and appeared to be gaining some traction, retreated sharply in June. Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence. Until the pace of job growth picks up, consumer confidence is not likely to pick up."
Overall, while there was some improvement in US consumer confidence from March to May, certainly relative to the record low of 25.3 recorded in February 2009, the confidence level remains extremely low by historical standards and well below the long-term average of around 95. Over the years, the single biggest factor that impacts consumer confidence is the state of the labour market, which is still struggling to gain traction, especially in the private sector.
The Consumer Confidence Survey is based on a representative sample of 5 000 US households.
Download the presentation slides