September 1, 2004 -- By looking at recent economic data, it may be nearly impossible to get a grip on what's happening in the economy. And that might be what drove consumer confidence down in August to its lowest level since May.
While a Commerce Department report on Monday showed that consumer spending was up in July, consumer confidence fell sharply in August, according to a survey by The Conference Board, a private forecasting organization. The index dropped to 98.2 from 105.7 in July. Economists polled by Dow Jones Newswire had forecast a level near 104.
Consumers were equally down on the current state of the economy and its future prospects. The survey's present situation index fell to 100.7 from 106.4 in July, while the index of expectations for the next six months dropped to 96.6 from 105.3.
Only 23.2 percent of those surveyed said that current conditions are "good," compared to 25.2 percent the previous month. Those describing conditions as "bad" grew to 20.1 percent, up from 19.1 percent. Consumers claiming that jobs are "plentiful" dropped to 18.1 percent from 19.7 percent. Those that said jobs are "hard to get" were virtually flat at 25.8 percent.
As for economic conditions going forward, consumers anticipating things to get worse increased to 8.8 percent, up from 7.1 percent in July. Those expecting conditions to improve declined to 20.1 percent from 23.0 percent.
Consumers were also down on future hiring conditions, with 15.4 percent believing there will be fewer jobs over the next six months, up from 13.5 percent in July. Only 16.2 percent thought there would be more jobs, a drop off from the prior month's 19.5 percent. More consumers, however, expected that their incomes would improve, with 19.3 percent believing they would make more in the coming months, compared to 18.0 percent in July.
MATT QUINN contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.