ETFs At Risk As U.S. Consumer Confidence Takes A Hit In July

The rising number of coronavirus cases in the United States took a toll on consumer confidence in July, as worries about job prospects and business conditions surfaced. The Conference Board's measure of consumer confidence index stands at 92.6, comparing unfavorably with June’s reading of 98.3. Moreover, July’s reading lagged the consensus estimate of 94.5, per a Reuters’ poll.

The Present Situation Index, which gauges consumer views on current business and labor market conditions, rose to 94.2 in July, from 86.7 in the previous month. Meanwhile, the Expectations Index, which is a measure of consumers’ short-term (for the next six months) outlook for income, business and labor market conditions, declined from 106.1 in the previous month, to 91.5 in July.

It is believed that, given the uncertainty surrounding the coronavirus pandemic, consumer spending might not rise in the near term, at least. Also, the second half of 2020 is expected to keep facing the brunt of the coronavirus pandemic as the second wave of the outbreak is gathering steam.

Commenting on the consumer confidence data, Lynn Franco, senior director of economic indicators at The Conference Board, said that “looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects. Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.”

Current U.S. Economic Scenario

The aggravating coronavirus cases seems to have spooked consumers in July, as the total number of cases have crossed 4.4 million, with at least 150,000 deaths, per a CNN report. Also, the U.S. economy’s second-quarter GDP’s most devastating plunge of 32.9% on an annualized basis, per the Commerce Department’s first reading on the data, has dented investor optimism (per a CNBC article). The downside was largely believed to be due to declining personal consumption, exports, inventories, investment and spending by state and local governments.

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