Consumers became significantly more pessimistic in August due to a combination of persistent inflation pressures and fears over the Delta variant. The Conference Board reported that Consumer Confidence suffered its biggest decline since last year’s pandemic-induced recession. The -12.4 point decline in the Future Expectations component was especially pronounced (bottom graph). If this loss of confidence starts to be reflected in consumer spending (which accounts for approximately two-thirds of U.S GDP), the U.S. economy could suddenly find itself skating on thin ice.
