Americans' confidence in the economy returned to June levels, after a July spike, according to the Consumer Confidence Index released last week by the Conference Board. The Index now stands at 105, down from its peak of 112.6 in July, and returning to the June level of 103.9.
What It Means to You
The Consumer Confidence Index is a lagging indicator. This means that most people don't really realize what is happening with the economy until after it has already happened. Lynn Franco, Director of the Conference Board Research Center, says that "..the volatility in financial markets and continued sub-prime housing woes may have played a role in dampening consumers' spirits."Declining consumer confidence can depress the economy by inhibiting shopping, one of the key drivers of economic growth. However, the factors causing a decline in confidence, such as a smaller stock portfolio and housing values, will probably have a greater impact on consumer spending.
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