U.S. consumer confidence surged to near an 18-year high in August, as households remained upbeat on the labor market, pointing to strong consumer spending that should help to sustain the economy for the remainder of the year.
Lucia Mutikani of Reuters had the news:
The Conference Board said its consumer confidence index jumped 5.5 points to 133.4 this month, the highest reading since October 2000. Consumers’ assessment of both current business and labor market conditions improved further in August.
Many consumers said they planned to buy a house or other big-ticket items in the months ahead. The survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, rose to 30.0 in August from 28.0 in the prior month.
That measure closely correlates to the unemployment rate in the Labor Department’s employment report. It is consistent with continued reduction in slack in the labor market, which is near full employment. Consumers’ near-term inflation expectations moderated this month from July.
The Conference Board survey’s findings are in stark contrast with a University of Michigan survey showing consumer sentiment falling to an 11-month low in early August as households worried about rising inflation eating into their modest wage increases and eroding their purchasing power.
Michael Sheetz of CNBC.com reported that the number suggests solid economic growth for the rest of the year:
“Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement.
August saw that optimism increase among consumers, the Conference Board found, with the percentage of consumers expecting business conditions will get better over the next six months increasing to 24.3 percent from 22.9 percent.
“These historically high confidence levels should continue to support healthy consumer spending in the near-term,” Franco added.
The survey measures American’s sentiment on current economic conditions and prospects for the next six months, including business and labor market conditions. Since consumer spending accounts for about 70 percent of U.S. economic activity, economists pay close attention to the number.
Sho Chondra of Bloomberg News reported that purchases of big-ticket items remains strong:
The report showed a greater share of respondents anticipate purchasing big-ticket items including homes, cars and major appliances within six months, which bodes well for the outlook for consumer spending. While a smaller share said that they expect employment to rise in coming months, more Americans were optimistic about pay gains.
The figures contrast with the University of Michigan’s consumer sentiment index, which fell this month to the lowest in almost a year amid less favorable views on purchasing big-ticket items and persistent concerns about trade tensions.
“These historically high confidence levels should continue to support healthy consumer spending in the near term,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement.
