American Consumer Confidence Jumps Again in July to a Two-Year High

The Conference Board said Consumer Confidence in June popped 117.0 in July (consensus 111.5) from an upwardly revised 110.1 (from 109.7) in June to its highest level since July 2021. In the same period a year ago, the index stood at 95.3. Noticeably sentiment has become more optimistic with the uptick in consumer confidence from a pickup in views about current conditions and a brighter outlook for consumers’ family finances. Inflation coming down, though still at lofty levels and the labor market remaining tight are reflected with optimism. Consumers continued to report intentions to spend less on discretionary services.

The expectations Index rose above the 80.0 for just the second time in 16 months of the last 17. Expectations 80 level historically signals a recession within the next year. Despite rising interest rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market. Although consumers are less convinced of a recession ahead, still anticipating one likely before yearend.

American consumers’ short-term outlook shows a bounce back after they had become became decidedly gloomy, becoming considerably less upbeat about their short-term income prospects. That was scuppering plans to buy homes, autos, and major appliances. We will see if the change is a relief or meaningful.

The Conference Board

US Consumer Confidence July 2023

US CB Consumer Confidence July: 117.0 in July (consensus 111.5)

  • Up from an upwardly revised 110.1 (from109.7) in June.
  • The Present Situation Index increased to 160.0 from 155.3
  • The Expectations Index dropped to 88.3 from 79.3

“Consumer confidence rose in July 2023 to its highest level since July 2021, reflecting pops in both current conditions and expectations,” said Dana Peterson, Chief Economist at The Conference Board. “Headline confidence appears to have broken out of the sideways trend that prevailed for much of the last year. Greater confidence was evident across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000.”

    ““Assessments of the present situation rose in July on brighter views of employment conditions, where the spread between consumers saying jobs are ‘plentiful’ versus ‘hard to get’ widened further. This likely reflects upbeat feelings about a labor market that continues to outperform. When asked about current family financial conditions (a measure not included in calculating the Present Situation Index), the share of respondents citing a ‘good’ situation rose, and those citing ‘bad’ conditions fell, signaling still-healthy family finances. This might reflect softening inflation and continued income support from employment..”

    “Expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability. This likely reveals consumers’ belief that labor market conditions will remain favorable. Expectations for future incomes ticked down slightly, a potential reflection of slower wage growth compared to a year ago. The measure of expected family financial situation, six months hence (not included in the Expectations Index) also softened somewhat in July—despite further decline in the 12-month forward inflation expectations gauge.

    “The proportion of consumers saying recession is “somewhat” or “very likely” to occur ticked up in July, contrary to the Expectations Index spiking this month above the threshold of 80. Still, recession expectations remained below their recent peak, suggesting fears of a recession have eased relative to earlier this year.

    Present Situation

    Consumers’ assessment of current business conditions was slightly less optimistic in July.

    • 21.9% of consumers said business conditions were “good,” down from 23.4% last month.
    • 15.2% said business conditions were “bad,” essentially unchanged from 15.3%.

    However, consumers’ appraisal of the labor market improved.

    • 46.9% of consumers said jobs were “plentiful,” up from 45.4%.
    • 9.7% of consumers said jobs were “hard to get,” much lower than 12.6% last month.

    Expected Spending on Services, Next Six Months 

    (July 2023 Survey)

    “In our periodic survey of services, consumers continued to report intentions to spend less on discretionary services—including travel, recreation, and gambling—going forward. By contrast, they anticipate spending more in the months ahead on necessary services like health care, as well as cheaper services like streaming from home.” 

    Stock market performance and Sentiment Closely Correlated.

      Source: University of Michigan and Yahoo

      About The Conference Board

      The Conference Board publishes the Consumer Confidence Index® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website:

      The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.

      Source: The Conference Board

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