U.S. consumer confidence surged to a six-month high in August, driven by optimism about the economic outlook. However, growing concerns about the labor market, following an increase in the unemployment rate to 4.3%, have tempered this positive sentiment. The latest consumer confidence data from the Conference Board, released on Tuesday, highlights this duality.
The Conference Board's consumer confidence index rose to 103.3 in August, its highest level since February, surpassing economists' expectations. This boost was largely due to improved perceptions of business conditions over the next six months, signaling a reduced likelihood of a recession. "This report supports a rate cut on both the decline in inflation expectations and a softening labor market, but is not so weak as to suggest a recession at this point," said Conrad DeQuadros, senior economic adviser at Brean Capital.
Despite the rise in overall confidence, unease about the labor market persists. The survey’s labor market differential, which measures the gap between those viewing jobs as "plentiful" and those seeing them as "hard to get," fell to its lowest point since March 2021. "The message here is that the July unemployment increase was not just a fluke," noted Abiel Reinhart, an economist at J.P. Morgan.
The survey also revealed that consumers are becoming more pessimistic about their income prospects over the next six months. This growing anxiety about finances is influencing their spending plans, with a noticeable decline in the intention to purchase motor vehicles, major household appliances, and homes. Higher mortgage rates and home prices have made homeownership increasingly unattainable for many, although the rising inventory of homes on the market may help curb house price inflation.
Overall, while U.S. consumer confidence has strengthened, the persistent concerns about the labor market and personal finances could weigh on consumer spending in the coming months.
(Source:www.conference.board.org)
The Conference Board's consumer confidence index rose to 103.3 in August, its highest level since February, surpassing economists' expectations. This boost was largely due to improved perceptions of business conditions over the next six months, signaling a reduced likelihood of a recession. "This report supports a rate cut on both the decline in inflation expectations and a softening labor market, but is not so weak as to suggest a recession at this point," said Conrad DeQuadros, senior economic adviser at Brean Capital.
Despite the rise in overall confidence, unease about the labor market persists. The survey’s labor market differential, which measures the gap between those viewing jobs as "plentiful" and those seeing them as "hard to get," fell to its lowest point since March 2021. "The message here is that the July unemployment increase was not just a fluke," noted Abiel Reinhart, an economist at J.P. Morgan.
The survey also revealed that consumers are becoming more pessimistic about their income prospects over the next six months. This growing anxiety about finances is influencing their spending plans, with a noticeable decline in the intention to purchase motor vehicles, major household appliances, and homes. Higher mortgage rates and home prices have made homeownership increasingly unattainable for many, although the rising inventory of homes on the market may help curb house price inflation.
Overall, while U.S. consumer confidence has strengthened, the persistent concerns about the labor market and personal finances could weigh on consumer spending in the coming months.
(Source:www.conference.board.org)
