Recession fears return as consumer confidence drops
Consumer confidence plummeted in August to its lowest level since the 2007-09 financial crisis nearly decimated the economy, all but negating a recent uptick in consumer spending and reviving fears that the country is on the brink of another recession.
The private-sector Conference Board said Tuesday that its index of consumer attitudes sank to 44.5% — its weakest point since April 2009 — from a downwardly revised 59.2% in July. Economists had expected a much less pronounced decline.
“There is basically nothing for consumers to be confident about,” said economist Gennadiy Goldberg.
Weighing on consumers’ minds is the loss of the U.S.’s triple-A credit rating earlier this month following a drawn-out battle in Congress over spending that nearly led the country to default on its bills.
The jobless rate has remained stubbornly high, and housing numbers have been sluggish.
And there’s likely only more bad news to come: The government’s August jobs report, due Friday, is expected to show that the unemployment rate held at 9.1%.
The ill outlook prompted Chicago Federal Reserve Bank President Charles Evans to say Tuesday that he favored some of the most aggressive action to date on the part of the central bank to stabilize the economy.
“It’s difficult to characterize the labor market as anything other than consistent with being in a recession,” Evans told CNBC.