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Economy in Brief

U.S. Consumer Confidence Is Unexpectedly Strong During July
by Tom Moeller  July 27, 2021

• Confidence reaches pre-pandemic high.

• Appraisal of current conditions improves; expectations remain firm.

• Job market indexes are strong.

The Conference Board Consumer Confidence Index edged 0.2% higher (40.8% y/y) this month to 129.1 from 128.9 in June, revised from 127.3. A decline to 124.0 had been expected in the Action Economics Forecast Survey. The confidence index stood at the highest level since February 2020, up from the April 2020 low of 85.7.

The Present Situation index improved 0.4% (67.2% y/y) to 160.3 in July from 159.6 in June, revised from 157.7. The Consumer Expectations reading slipped 0.1% (+21.9% y/y) to 108.4 from 108.5 in June, revised from 107.0.

The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, improved to a near-record 44.4% from 44.2% in June, revised from 43.5%. This series has had a 75% correlation with the unemployment rate over the last ten years. The jobs plentiful measure edged up this month after surging in June, also to a near-record high. Remaining near the record low was the jobs hard-to-get index.

Business conditions were perceived as good by an increased 26.4% of respondents in July. Expectations that business conditions would improve in six months eased to 33.4%. More jobs were expected in six months by a 27.7% of respondents, down from 29.6% twelve months ago. The percentage expecting income to increase rose to 20.6%, the most since February of last year.

The expected inflation rate in twelve months eased to 6.6% after surging to 6.7% last month. That remained up from a 4.4% low in January of last year. The share of respondents planning to buy a new home within six months eased to 0.6% and remained down from 2.0% last June. Those planning to buy a major appliance surged to 56.8%, the highest level since December 2017 and up from 44.3% in May.

Confidence of individuals under 35 years fell sharply m/m, but the index remained up by roughly one-third y/y. Confidence amongst individuals 55 and over surged to a pre-pandemic high. Confidence amongst those between 35 and 54 rose modestly m/m, but also was near the pre-pandemic high.

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.

Conference Board (SA, 1985=100) Jul Jun May Jul '20 2020 2019 2018
Consumer Confidence Index 129.1 128.9 120.0 91.7 101.0 128.3 130.1
   Present Situation 160.3 159.6 148.7 95.9 109.8 169.8 164.8
   Expectations 108.4 108.5 100.9 88.9 95.2 100.6 107.0
Jobs Gap (%) 44.4 44.2 36.9 2.2 6.8 33.2 27.6
   Jobs Plentiful (%) 54.9 54.7 48.5 22.3 27.8 45.8 42.0
   Jobs Hard to Get (%) 10.5 10.5 11.6 20.1 21.0 12.6 14.4
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