The outlook for the economy remains murky as the latest indicators from The Conference Board show a drop in confidence on the part of American consumers.
A Note to our Dealers
While business here at Auto Credit Express has been on the rise since the third quarter of last year, something we attribute in part to the quality of our automotive sales leads and the expertise of our call center employees, there are a number of surveys – most notably the one released on Tuesday by The Conference Board – that suggest on the retail side of things that many consumers continue to feel an uncertainty about where the economy is going as well as an unease with their own current situations and much less of an expectation for a robust recovery in the U.S. economy.
Confidence Drops in June
According to The Conference Board, its’ Consumer Confidence Index dropped from May’s reading of 62.7 to 52.9 (the Index in 1985 was 100) and remains below the level of 87.3, which was recorded in January of 2007.
Says Lynn Franco, 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."
Changes in current conditions also declined in June with 8% saying conditions are good (down from 9.7% in May) while 42.4% stated that business conditions are bad (up from 39.5%). The perception that the employment market is still tight also increased, with 44.8% claiming that jobs are “hard to get” (up from 43.9% in May) while only 4.3% of those surveyed said that jobs are “plentiful” (down from 4.6% in May).
Consumer’s near-term outlook, with those expecting an improvement in business conditions decreasing from 22.8% in May to 17.2% in June. More of those consumers surveyed (14.9%) also expect conditions to worsen in the next 6 months compared to the May survey (11.9%)
The automotive market
Looking further into it, there is little to suggest that consumers in large numbers are ready to jump back into the car market in large numbers. According to the report, “Consumers were also much less optimistic about future job prospects. The percentage of consumers anticipating more jobs in the months ahead decreased to 16.0 percent from 20.2 percent, while those anticipating fewer jobs increased to 20.8 percent from 17.8 percent. The proportion of consumers anticipating an increase in their incomes declined to 10.6 percent from 11.4 percent.”
A bit of good news
On a more positive note, however, was an earlier report the Conference Board released on June 17th regarding the Leading Economic Indicators for the month of May:
"The index points to continued, though slower, U.S. growth for the rest of this year," says Bart van Ark, chief economist of The Conference Board.
"The LEI for the United States has been rising since April 2009, and though its growth rate has slowed in 2010, it is well above its most recent peak in December 2006," says Ataman Ozyildirim, economist at The Conference Board. "Correspondingly, current economic conditions, as measured by The Conference Board Coincident Economic Index® (CEI) for the United States, have been improving steadily since November 2009, thanks to gains in payroll employment and industrial production."