Consumer Confidence Fell Sharply

The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in August confidence to 102.9.

During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.

Consumers' assessment of the present situation reversed all of the prior month's modest uptick and fell 8.0% (-0.3% y/y) to the lowest level (123.4) this year. The percentage of respondents who viewed business conditions as good (26.1%) fell though the percentage that viewed jobs as hard to get (21.1%) rose to its highest level this year.

The index measuring consumers' expectations fell 5.7% (-10.2% y/y). Expectations for better business conditions worsened to the lowest (15.9%) since October and fewer respondents expected more jobs.

Expectations for the inflation rate in twelve months jumped to 5.5%, the highest level since May.

The Conference Board’s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Wealth inequality is vast and growing from the Economic Policy Institute is available here

The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available here.

The Japanese Ministry of Internal Affairs and Communication publishes a variety of data relating to household's living expenditures as part of their report on the Family Income and Expenditure Survey. There are data on the actual expenditures for all households and for workers' household. In addition to total expenditures, there are a number of spending categories. Data are given for "fundamental" and "selective" expenditures, what we would call nondiscretionary and discretionary spending. There are indexes--seasonally adjusted and not seasonally adjusted-- of the actual expenditures based on 2005=100. . Nominal and Real Indexes on a seasonally adjusted basis are available for all households, including agricultural, forestry and fisheries households and for all households excluding those households. Similar data for workers' households are also available. The data start in January 2000.

The monthly data have shown a slight downward trend over the past seven years as can be seen in the first chart that shows the year to year changes in the real and nominal indexes for workers' households. If the monthly data of the real index for living expenditures for all households including agriculture, forestry and fisheries households are aggregated to a quarterly basis, the quarterly data appear to show the same general movement as that shown by household consumption in the national accounts as can be seen in the second chart. Thus the living expenditure data appear to be coincident rather than leading indicators of total household consumption.

The data can be used to reveal spending patterns. For example, fundamental expenditures tend to take up between 52-58% of total spending while selected expenditures take up between 40-48% as shown in the third chart.