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Economy in Brief

U.S. Consumer Confidence Improves
by Tom Moeller  June 27, 2017

The Conference Board Consumer Confidence Index rose 1.1% during June (22.1% y/y) to 118.9, following a little-revised 1.5% decline during May to 117.6. The index was 4.8% below its March peak, which was its highest level since December 2000. The Action Economics Forecast Survey looked for a decline to 116.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The increase in confidence reflected a 4.1% gain (25.5% y/y) in the present situation index to 146.3, its highest level since July 2001. The expectation reading declined 1.7% (+18.9% y/y) to 100.6, down for the third straight month.

The percentage of respondents indicating that business conditions are "good" ticked higher to 30.8%, down from 32.4% three months ago. The percentage saying business conditions are "bad" eased to 12.7%. Respondents stating that jobs are "plentiful" strengthened to 32.8%, the highest percentage since August 2001. The percentage claiming jobs are "hard to get" declined to 18.0%, also a 16 year low. These changes in views on labor market conditions led to a slightly higher labor market differential (a reliable indicator of the unemployment rate) of 14.8 percentage points, remaining near its 2001 high.

The percentage expecting business conditions to improve over the next six months eased to 20.4%, down sharply from its 26.9% March peak. For labor markets, the percentage expecting more jobs in the months ahead rose slightly to 19.3%, but remained below the 23.8% March peak. The percentage of consumers expecting their incomes to strengthen rose to 22.2%, up from the 2009 low of 7.8%.

The expected rate of inflation in twelve months eased to 4.6%, the lowest level in six months. The percentage expecting higher interest rates over the next twelve months declined to 66.6%, down from a high of 72.2% three months ago.

Confidence amongst individuals over age 55 improved slightly, but remained below the cycle high reached three months ago. Confidence amongst individuals aged 35-to-54 also improved, but remained below the March high. Confidence amongst respondents under age 35 eased slightly, but remained near the 2000 high.

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

Conference Board (SA, 1985=100) Jun May Apr Y/Y % 2016 2015 2014
Consumer Confidence Index 118.9 117.6 119.4 22.1 99.8 98.0 86.9
  Present Situation 146.3 140.6 140.3 25.5 120.6 111.7 87.4
  Expectations 100.6 102.3 105.4 18.9 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 136.5 138.0 128.6 3.2 122.4 116.0 106.6
  Aged 35-54 Years 123.0 119.5 121.7 17.5 106.2 103.9 92.4
  Over 55 Years 109.2 107.3 112.5 47.8 84.6 84.1 73.8
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