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Economy in Brief

U.S. Consumer Confidence Little Changed Overall but Components Mixed
by Carol Stone, CBE  August 27, 2019

The Conference Board's Consumer Confidence Index edged down 0.5% (+0.3% y/y) in August to 135.1 (1985=100) from 135.8 in July. Despite this slight monthly decrease in the index, it was stronger than the estimate in the Action Economics Forecast Survey, which looked for a drop to 128.0 after a sizable increase in July.

Results were very mixed among the major ingredients in the survey. The present situation is seen as better, at 177.2, up 3.7% (+2.5% y/y) from 170.9 in July. But expectations declined 4.8% (-2.1% y/y) to 107.0 from 112.4 in July.

And differences by age group are quite marked. People under 35 are much more optimistic in August, with their index at 150.3, up 6.8% from July (+10.7% y/y); this is the highest reading ever in this index, which dates from January 1980. Respondents aged 35-54 became more pessimistic, however, as their confidence fell 4.2% in August to 136.5 (-0.6% y/y), and there was no change at all in the confidence of people over 55, with their index at 127.8 (-3.2% y/y), exactly the same as in July.

The present conditions appraisals were clearly positive: the share of people believing business conditions are "good" rose to 42.0% from July's 39.9%, as those experiencing "bad" conditions fell to 9.8% from 11.2%. The jobs market is still perceived to be quite strong, with the percentage of respondents who believed jobs were plentiful rising to 51.2%, the highest since July 2000. Jobs were viewed as hard to get by 11.8% of respondents, the lowest since July 2000.

On the expectations front, the portion of respondents expecting business conditions to improve decreased to 21.9% from July's 24.0%, while the share looking for some deterioration increased to 10.0% from 8.4%. There is little change in expectations for more jobs, at 19.7% in August versus 19.9% in July. However, the share looking for fewer jobs over the next six months rose to 13.6% from 11.1% previously. More income is expected by 23.8% of respondents, down from 24.9%, while the share looking for less income also decreased, by just a bit, to 5.8% from 6.6% in July.

People look for somewhat more inflation, with expectations for the y/y increase in the CPI back up to 5.0% in August from 4.6% the month before. Survey participants do tend to expect interest rates to decline, as indicated by 27.3% of them, up from 15.9% in July, while the share expecting rates to increase fell to 39.7% from 49.6%.

The share of respondents planning to buy a house fell to 6.0% from July's 7.4%, with those looking specifically for a new house fell back to 1.4% from July's 2.0%; notably, this marks a revision of the original July number of 2.3% which was among the highest ever. The current 2.0% figure is still the largest since 2007, that is, before the Great Recession. The percentage who plan to buy a major appliance eased to 51.6% in August from 52.4% in July. And the share who plan to buy a car rose slightly to 13.3% from July's 12.5%.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.

Conference Board (SA, 1985=100) Aug Jul Jun Aug Y/Y % 2018 2017 2016
Consumer Confidence Index 135.1 135.8 124.3 0.3 130.1 120.5 99.8
   Present Situation 177.2 170.9 164.3 2.5 164.8 144.8 120.3
   Expectations 107.0 112.4 97.6 -2.1 107.0 104.3 86.1
Consumer Confidence By Age Group
   Under 35 Years 150.3 140.7 116.4 10.7 133.7 130.2 122.4
   Aged 35-54 Years 136.5 142.5 133.5 -0.6 132.2 123.5 106.2
   Over 55 Years 127.8 127.8 119.6 -3.2 126.3 112.9 84.6
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