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Economy in Brief

U.S. Consumer Confidence Strengthens
by Tom Moeller  July 30, 2019

The Conference Board reported that its Consumer Confidence Index jumped 9.2% (6.1% y/y) to 135.7 during July and reversed its 5.3% June decline. It was the highest level since November. An increase to 125.0 had been expected in the Action Economics Forecast Survey. During the past ten years, there has been a 62% correlation between the level of consumer confidence and the year-on-year change in monthly real consumer spending.

Improvement in the expectations series of 15.0% (9.6% y/y) to 112.2 led the overall rise in confidence. The present situations reading rose 4.0% (2.9% y/y) to 170.9, the highest level since February.

The percentage of respondents who believed that business conditions were good rose to 40.1%, but remained below the high of 42.0% last November. The percentage of respondents who believed jobs were plentiful jumped to 46.2%, nearly the most in eighteen-years. Jobs were viewed as hard to get by a lessened 12.8%, another eighteen-year low.

On the expectations front, a greatly increased 24.0% of respondents expected business conditions to improve, a nine-month high. A moderately higher 20.5% thought that there would be more jobs in six months, and a greatly lessened 11.5% believed there would be fewer jobs. A much greater 24.7% felt that income would increase over the coming six months, nearly a cycle high.

Expectations for the y/y increase in the CPI eased to 4.7% from a 5.1% high in June, but remained up from February's 4.3% low. Respondents expecting interest rates to rise collapsed to 49.9% from the 73.2% October peak.

The 2.3% of respondents who planned to buy a new home was nearly a record. The percentage who planned to buy a major appliance rose moderately to 52.8%.

By age group, for those under age 35, the confidence reading rebounded from the lowest level in three years. Confidence in the 35-54 year old age bracket rose and nearly matched the highest level since 2000. Confidence amongst individuals over age 55 also rose slightly and was near the 2000 peak.

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

Conference Board (SA, 1985=100) Jul Jun May Jul Y/Y % 2018 2017 2016
Consumer Confidence Index 135.7 124.3 131.3 6.1 130.1 120.5 99.8
   Present Situation 170.9 164.3 170.7 2.9 164.8 144.8 120.3
   Expectations 112.2 97.6 105.0 9.6 107.0 104.3 86.1
Consumer Confidence By Age Group
   Under 35 Years 137.1 116.4 120.0 -0.9 133.7 130.2 122.4
   Aged 35-54 Years 142.2 133.5 135.1 13.2 132.2 123.5 106.2
   Over 55 Years 129.2 119.6 132.5 4.4 126.3 112.9 84.6
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