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Economy in Brief

U.S. Consumer Confidence Strengthens
by Tom Moeller  July 25, 2017

The Conference Board Consumer Confidence Index jumped 3.2% (25.2% y/y) during July to 121.1 following a 0.3% June dip, revised from +1.1%. Despite the increase, the index remained 3.0% below its March peak, which was its highest level since December 2000. The Action Economics Forecast Survey looked for a 0.7% rise to 116.8. 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 2.7% gain (24.4% y/y) in the present situation index to 147.8, its highest level since July 2001. The expectations reading increased 3.7% (26.0% y/y) to 103.3 but did not fully recapture three straight months of decline.

The percentage of respondents indicating that business conditions are "good" surged to 33.3%, a seventeen year high. The percentage saying business conditions are "bad" remained near a recovery low of 13.5%. Respondents stating that jobs are "plentiful" also surged to a 2001 high of 34.1%. The percentage claiming jobs are "hard to get" declined to 18.0%. These improved views of labor market conditions led to a labor market differential (plentiful minus hard to get) of 16.1 percentage points. This differential is 97% inversely related to the unemployment rate.

The percentage expecting business conditions to improve over the next six months rose moderately to 22.9%, but remained below its 26.9% March peak. The percentage expecting more jobs in the months ahead held steady at 19.2%, below the 23.8% March peak. The percentage expecting their incomes to strengthen eased to 20.0%, also down from the March high.

The expected rate of inflation in twelve months held steady m/m at 4.6%, down from 4.9% in January. The percentage expecting higher interest rates over the next twelve months rose to 68.2%, down from a high of 72.2% in March.

Confidence amongst individuals over age 55 approached the cycle high reached. Confidence amongst individuals aged 35-to-54 also improved moderately. Confidence amongst respondents under age 35 fell sharply to a three-month low.

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) Jul Jun May Y/Y % 2016 2015 2014
Consumer Confidence Index 121.1 117.3 117.6 25.2 99.8 98.0 86.9
  Present Situation 147.8 143.9 140.6 24.4 120.6 111.7 87.4
  Expectations 103.3 99.6 102.3 26.0 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 128.7 136.7 138.0 7.2 122.4 116.0 106.6
  Aged 35-54 Years 123.3 120.7 119.5 17.7 106.2 103.9 92.4
  Over 55 Years 114.6 107.5 107.3 41.7 84.6 84.1 73.8
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