Consumer Confidence Rises Slightly in August

The Conference Board's Index of Consumer Confidence rose 1.4% m/m (-5.0% y/y) to 103.3 in July, its highest reading since February, from an upwardly revised 101.9 in July (previously 100.3). The Actions Economics Forecast Survey had looked for a marginal rise to 100.5. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.

Both component measures also rose in August. The present situation index edged up to 134.4 from 133.1 (revised down from 133.6 previously). The expectation index increased to 82.5 in August from an upwardly revised 81.1 in July (previously 78.2).

The percentage of respondents assessing business conditions as “good” increased to 20.8% in August from 19.2% in July. By contrast, the percentage assessing conditions as “bad” slipped to 17.7% from 18.2%.

The appraisal of labor market conditions continued to deteriorate in August with 32.8% of respondents thinking that jobs are plentiful, down from 33.4% in July. This was the sixth consecutive monthly decline for this measure. By contrast, 16.4% think that jobs are hard to get, up slightly from 16.3% in July. This measure has risen rather steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) fell to 16.4%, its lowest reading since March 2021, from 17.1 in July. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations over the next six months were mixed in August. Eighteen percent of respondents expect business conditions to improve over the next six months, up from 15.4% in July while 15.6% expect them to worsen, down from 16.2% in July. On employment, 16.1% expect jobs to increase over the next six months, versus 15.2%, though 17.5% expect jobs to decline versus 16.4% in July. Regarding income, 16.9% expect it to increase, down from 17.2% in July while 12.7% expect it to decrease, up from 11.6% last month.

Inflation expectations over the next 12 months fell to 4.9% in August, the lowest reading since March 2020. Interest rates are expected to fall with the percentage expecting an increase over the coming 12 months falling 4%-points and the percentage expecting a decrease rising 7.1%-points, the third consecutive monthly increase. By contrast, the percentage of respondents expecting equity prices to increase over the next 12 months fell 3.7%-points, while the percentage expecting a decline increased 4.1%-points, its third monthly decline in the past four months.

Consumer spending plans over the next six months generally fell in August with the percent planning to buy a home falling to 4.1%, its third consecutive monthly decline to its lowest level since February 2013. Plans to purchase major appliances fell 2%-points, the fourth monthly decline in the past six months. Plans to purchase an automobile declined to 11.0%, the second decline in the past three months, from 11.6% in July.

The Consumer Confidence data are available in Haver’s CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.