U.S. Consumer Confidence Declines Sharply in August

The Conference Board's Index of Consumer Confidence weakened 6.9% during August (+2.4% y/y) to 106.1 from 114.0 in July, revised from 117.0. It was the lowest level of confidence in three months. A reading of 116.6 for August had been expected in the Action Economics Forecast Survey.

The Expectations Index declined 8.9% (+5.8% y/y) to 80.2 following a 10.0% July rise and an 11.9% increase in June. The index remained up from a most recent low of 70.4 in February. The Present Situations Index fell 5.4% (-0.3% y/y) to 144.8 from 153.0 in July. It reached a high of 155.3 in June.

Roughly 21% of respondents characterized current business conditions as good in August. That equaled July but was down from a high of 23.4 in June. These figures are increased from a low of 16.3% in July of last year. Labor market readings weakened this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful versus those saying jobs are hard to get, declined to 26.2% from 32.4% in July. Both were below the March 2022 high of 47.1. Calculated by Haver Analytics, this series has a 64% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell to 40.3% from 43.7 and remained down from the March 2022 high of 56.7. The jobs hard to get measure rose to 14.1% from 11.3%. It was the highest level in roughly two years.

Consumers assessment of future business conditions deteriorated as a lessened 16.2% felt that conditions would get better in six months. That was down from a high of 20.9% % in December. A steady 16.7% of respondents felt there would be more jobs in six months. A lessened 16.5% expected income to increase in six months, down from a high of 19.6% in October of last year.

The expected inflation rate in twelve months of 5.8% compared to 5.7% in July. It remained below the 7.9% high in June of last year, but it was above the 4.4% low in January 2020.

A greatly increased 64.2% of respondents felt that interest rates would be higher in twelve months, compared to 59.6% one month earlier, while a lessened 11.7% thought they would be lower. Thirty-four percent of respondents thought that stock prices would be higher in twelve months, compared to 36.5% in July. That remained up, however, from 28.9% twelve months ago. A slightly higher 30.5% thought stock prices would be lower versus a high of 44.7% in July of last year.

The share of respondents planning to buy a home within six months was little changed m/m at 5.5%. It was steady y/y, but down from the October high of 7.4%. The percentage of respondents planning to buy a major appliance edged higher to 45.2% but has fallen from a high of 52.4% in October 2022.

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.