"Consumer confidence faded further in July as consumers continue to grow increasingly more pessimistic about the short-term outlook," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. "Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves."
Before the sharp drop in June, the consumer confidence index had risen for three straight months. And while the latest reading of 50.4 is much higher than the record low of 25.3 hit in February 2009, it is still significantly below 90, a level that typically indicates a stable economy.
The decline in consumer confidence in July was driven by lower expectations about short-term economic improvement and more pessimism about the present state of the economy.
The index's expectations component slipped to 66.6 in July from 72.7 in June, while the present situation component, which tracks consumers' expectations over the next few months, fell to 26.1 from 26.8.
Consumers were also increasingly gloomy about job prospects this month, with 14.3% of consumers anticipating more jobs in the coming months, down from 16.2% in June.
They had reason to worry, since the government's closely watched jobs report for June showed that the U.S. economy lost jobs for the first time this year.
July's report is expected to show a loss of 116,000 jobs, following the decline of 125,000 in June.
Consumer ConfidenceReport shows what to expect in consumer recovery
