Consumer confidence remained elevated this month, according to updated survey data. First, the University of Michigan’s consumer sentiment index ended August at 96.2. That is down slightly from July but a better-than-expected improvement from the mid-month reading and still well above pre-election levels. Weighing heavily on confidence in August was inflation, as evidenced by a spike in the number of respondents complaining about the prices for homes, vehicles, and large household durables. Much more encouraging was the Conference Board’s consumer confidence index, also released this week, which jumped to 133.4 in August. That was the highest reading since October 2000 and significantly better than anticipated.
Americans’ opinion of current economic conditions surged to an 18-year high this month, and outlooks on the future also improved, albeit slightly due to an accompanying uptick in concerns about the future business climate. The strong labor market appears to be the main factor behind consumer optimism because only 12.7 percent of surveyed Americans said that they consider jobs “hard to get” currently, the lowest reading since the dot-com bubble. Moreover, the percentage of respondents that said they expect a pay increase in the months ahead rose from 20.4 percent to 25.5 percent in August, while the proportion expecting a pay cut fell from 9.4 percent to 7.0 percent. Lynn Franco, Director of Economic Indicators at The Conference Board, added that “Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.”
Sources: Econoday, UoM, ZH, The Conference Board, Wells Fargo
Post author: Charles Couch