U.S. Consumer Confidence Strengthens in July to Two-Year High

The Conference Board's Index of Consumer Confidence strengthened 6.3% (22.8% y/y) to 117.0 during July following a 7.4% rise to 110.1 during June, revised from 109.7. It was the highest level of confidence since July 2021, up 22.8% from its recent low in July of last year. A reading of 112.3 for July had been expected in the Action Economics Forecast Survey.

The Present Situation Index rose 3.0% (14.5% y/y) to 160.0 following a 4.3% June increase to 155.3. It stood at the highest level since March 2020. The Expectations Index strengthened 10.4% (34.6% y/y) to 88.3 following an 11.9% increase in June. The index was at the highest level since January 2022.

Consumers' assessment of current business conditions continues to improve. Roughly 22% of respondents characterized conditions as good in July, close to the June response of 23.4%. These figures are increased from a low of 16.3% in July of last year. Labor market readings were better this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful versus those saying jobs are hard to get, rose to 37.2% from 32.8% in June. Calculated by Haver Analytics, this series has a 64% correlation with the unemployment rate over the last ten years. The jobs plentiful measure rose to 46.9%, but remained down from the March 2022 high of 56.7. It was increased from May’s low of 43.3%. The jobs hard to get measure declined to 9.7%, which was below the recent high of 13.7% in November.

Consumers assessment of future business conditions improved as an increased 17.1% of respondents felt that conditions would get better in six months, up from a low of 13.2% in May. Sixteen percent of respondents felt there would be more jobs in six months, up from a low of 13.8% in May. A lessened 16.3% 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 dipped to 5.7% from 5.8% in June and 6.1% in May. It remained below the 7.9% high in June of last year, but it was above the 4.4% low in January 2020.

A fairly steady 59.4% of respondents felt that interest rates would be higher in twelve months while a lessened 11.7% thought they would be lower. A higher 36.0% of respondents thought that stock prices would be higher in twelve months, up from a low of 25.5% twelve month ago. A lessened 28.0% 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 rose to 6.0%, from 5.9% in both of the prior two months, increased from 4.5% twelve months earlier but below the October high of 7.4%. The percentage of respondents planning to buy a major appliance eased to 45.9% and has fallen from a high of 52.4% in October.

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.