A key indicator of the strength of the American economy’s recovery shows that the recession is still rearing its ugly head. Sources indicate that the Consumer Confidence Index fell to 50.4 in July, its lowest mark in five months.

The Consumer Confidence Survey, used by financial experts to gauge the pulse of the average consumer, is determined by polling 5,000 U.S. households. The answers from this representative polling reveal pessimistic attitudes about the short-term future of the economy:

• The current Index figure, 50.4, is down from 54.3 in June and 63.3 in May. For perspective, the lowest number ever calculated by the Index was 25.3 in April of 2009, during the peak of the recession.
• Every component of the Index dropped during July. These components included negative attitudes about business and fears of a continually weak labor market.
• Only 4.3 percent of respondents said that available jobs were “plentiful.”
• Almost half of respondents said that jobs are “hard to get” in July, which was a 2.5 percent jump from such claims in June.
• The percentage of people expecting new jobs to become available in the coming months also dropped by a few percentage points, and the number of people expecting an improvement in business conditions also fell.

Effects of Lowered Consumer Confidence

These statistics seem dour, but how do they impact the real economic world? The director of the Conference Board’s Consumer Research Center, Lynn Franco, said the recent drop in consumer confidence could have a negative impact on a key period of consumer activity for business.

According to Franco, given consumers’ lowered confidence, as well as “pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”

Further, the lack of consumer confidence shows no signs of quickly shifting in a positive direction. As Franco said, “[c]oncerns 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.”

How Accurate is the Consumer Confidence Index?

Historically, the Index has been remarkably adept at providing economic insight. During its use, when the Index has detected rises in consumer confidence, those rises are accompanied by increases in consumer spending.

Since consumer spending is an integral part of the American economy, accounting for almost 70 percent of the country’s total GDP, rising consumer confidence generally leads to more spending, which invariably boosts our economic health.

As the economy continues to sputter, more and more people are finding it necessary to consider personal bankruptcy. If your confidence is down due to financial ills like debt or home foreclosure, consider contacting an personal bankruptcy attorney.