Consumer confidence has fallen further after weeks of intensified economic concerns and broad stock market declines, and Conference Board data due later this month could be even weaker than current projections suggest, Consumer Edge Research said on Monday.
Readings from high, middle and low-income consumers all deteriorated sharply, due mainly to dramatic declines in outlook, the independent equity research firm said.
The firm's Consumer Economic Index is now at 45.4, down 10 percentage points from July and down 1.5 points from the 46.9 level it reported on August 10. Two days after that report, the Thomson Reuters/University of Michigan's preliminary August reading showed that U.S. consumer sentiment had fallen to its lowest point since May 1980.
The 45.4 reading is the lowest since Consumer Edge Research began its index in March 2010.
Consumer Edge Research forecast that the Conference Board's full-month Consumer Confidence Index would deteriorate 8 to 10 percentage points from an unadjusted 59.5 in July when its report is issued on August 30.
As of Friday, consensus was calling for a 2.5 percentage point decline, so we believe there is downside risk to current expectations, Consumer Edge Research said.
While low-income and middle-income consumers felt the most impact from July to August, high-income earners have deteriorated the most since the peak seen in February, Consumer Edge Research said.
Compared with July, the confidence level for low-income consumers, those with incomes under $40,000, declined 10 percentage points; middle-income consumers with incomes from $40,000 to $100,000 had an 11 percentage-point drop; and high-income consumers, those making more than $100,000, had a 7 percentage points drop.
Business owners are also feeling more stressed. The roughly 5 percent of consumers who own businesses with at least one employee had an index of 63, the lowest point since the firm began calculating the index for that particular group in February.
Consumer Edge noted that it has less conviction in its Conference Board forecast and now feels its own index more accurately reflects true underlying consumer sentiment.
In February, economists noted that a change in Conference Board's survey data provider prompted revisions back to November 2010. Since that change, the link between that index and Consumer Edge Research's index has deteriorated, the firm noted.
Consumer Edge Research surveys at least 2,500 U.S. consumers online, generally during the first 18 to 23 days of the month.
(Reporting by Jessica Wohl, editing by Matthew Lewis)