U.S. consumers' confidence in the nation's economy dropped sharply in July. The Consumer Confidence Index now stands at 76.6, down nearly seven points from last month's 83.5, to the index's lowest point since March. Economists say the index is important to American industry because consumers generally spend less when their confidence is low.
The lackluster job market is having a dampening effect on consumer spirits, said Lynn Franco, director of the Consumer Research Center at the Conference Board, the private business analysis group that conducts the confidence survey. "Well, what we're seeing here is consumers are telling us jobs are harder to get in July as compared to June. And looking ahead, they don't expect a turnaround over the next six months," she said.
The Consumer Confidence Index measures both consumers' future expectations and their assessment of current conditions.
Analysts had expected continued improvement in consumer confidence, which had risen more than 20 points since March, when the U.S. was at war with Iraq.
Ms. Franco said ups and downs are common following war times. "Generally this volatility is what we see in consumer confidence until there's a sustainable turnaround in labor market conditions. It's similar to what we saw in the early '90s and it wasn't until the labor market began to grow at a pretty strong pace in around '94 that confidence took off as well," she said.
Ms. Franco said she expects to see more volatility in next month's index.