The Conference Board's Consumer Confidence Index (CCI) slipped a bit during July, following an encouraging two consecutive months of increase. The composite index was 2.0% lower in July 2001 than in June, and 18.5% lower than during July of 2000. The "Present Situation" sub-index decreased 3.1% over the latest month, while "Expectations" (defined as six months into the future) eased a slight 0.6% during July 2001 after rising a cumulative 32.2% over the prior four months.
With a July 2001 reading of 116.5 on the Conference Board's scale where average confidence during the year 1985 is equal to an index level of 100, the composite CCI began the second half of this year two points ahead of the first-half monthly average. So, despite the modest dip in July, the longer-term trend in consumer confidence remains modestly positive.
The CCIs for four of the nation's nine geographic regions registered improvement between June and July. Particularly sharp increases were recorded in the East South Central (+5.9%) and West South Central (+5.0%) regions. More modest improvement was recorded in the West North Central (+2.9%) and Rocky Mountain (+2.0%) states. But these gains were more than offset by declines in the other five regions of the country, with over-the-month confidence losses of more than 5% registered in the Middles Atlantic (-8.0%), Pacific Coast (-7.3%), and East North Central (-5.5%) regions. In absolute terms, consumer confidence during July 2001 was highest in the Rocky Mountain and West South Central states.
Nevertheless, confidence levels this July were much lower than consumer's outlook during July 2000 for all regions of the nation. Over-the-year declines ranged from a 9.9% drop in confidence among consumers in the Rocky Mountain states to losses of 22%-23% in the Middle Atlantic, Pacific Coast, and East North Central regions.
However, at the same time that consumers nationwide were indicating that they were marginally less confident about their job and income prospects and about the state of the U.S. economy, their actual buying plans reflected increasing optimism about the months immediately ahead. This may simply be a reflection of their plans to spend — not save — their forthcoming federal income tax rebate, but it does suggest that the critical consumer sector of the economy should continue to hold up reasonably well over the second half of this year.
The percentage of consumers surveyed nationwide by the Conference Board indicating that they planned to buy a home (either new or existing) increased from 3.4% in June to 3.8% during July. Prospective home buyers as a percentage of the consumer population had reached a cyclical high of 4.2% this March, but this July's 3.8% share was slightly better than July 2000's level of 3.6%.
In addition, an estimated 30.8% of consumers plan to purchase one or more major appliances over the next six months, the second highest level recorded over the past eleven months. And 9.4% of consumers during July indicated that they planned to buy a new or used motor vehicle over the coming six months, a sharp increase from the June level of only 6.7%, and near the record high of 9.5% set earlier this year.
Economic Indicators Index (Jun. 2001):
Building Materials Price Inflation - June
Housing Starts - June
Consumer Confidence by Region - June
New Residential Building Permits by Region - June
Recent Trends in New Residential Permits for 2000's Top 25 Metro Areas