Consumer Confidence rose 4.4 points in August to 101.1 and is back near its high for this cycle. Both the present situation and expectations series increased and consumers feel more positive about the job market.
To Hexit With Brexit! Consumers largely shrugged off any lingering concerns about the Brexit vote and the temporary turmoil it unleashed. The vote, which occurred after the June survey but well ahead of the July survey, weighed on expectations for future economic conditions. The stock market’s quick recovery and sustained run-up have allayed many of those fears. Moreover, back-to-back strong employment reports also show that the labor market is in better shape than many had feared. Consumers feel fairly positive about the economy right now and this is evident in the consumer spend ing figures, which grew at a 4.4 percent annual rate during the second quarter and are off to a strong start in the current quarter.
Labor Market Conditions Look Pretty Good The present situation series rose 4.2 points to 123.0, which marks a new high for this cycle. Both components of this series improved during the month, with the proportion of consumers rating current business conditions as good rising 2.7 points to 30 percent, also a new cycle high. One of the most encouraging aspects of this report was the marked improvement in consumers’ assessment of labor market conditions. The prop ortion of consumers stating jobs were plentiful jumped 3 points in August to 26 percent. The proportion stating jobs were hard to get also rose, however, climbing 1.3 points to 23.4 percent. The labor market differential, which takes the difference between these two series rose 1.7 points to 2.6 percentage points, which is the highest since Jan. 2008. While the improvement in the labor market differential is noteworthy, the rise in the jobs are hard to get series tempers some elation. The magnitude of the August increase in the jobs plentiful series makes the gain somewhat suspect. Consumers may be responding as much to the better employment news as they are to any actual improvement in the job market. This past month’s improvement may thus be more an affirmation of what has already occurred as opposed to providing a clue about where job growth is headed. The expectations series also posted solid but less dramatic improvement. The proportion of consumers expecting more jobs to be created over the next six months rose 0.7 points to 14.2 percent and the share expecting fewer jobs to be created rose 0.1 point to 17.5 perc ent. The proportion expecting their income to increase over the next six months jumped 1.7 points to 18.8 percent, while those that expected incomes to decrease fell 0.3 points to 10.7 percent.
Plans to buy automobiles were essentially unchanged in August at 11 .0 percent but plans to purchase a home jumped 1.3 points to 6.4 percent and buying plans for major appliances rose 1 point to 50.3 percent. Plans to buy a new home have been edging higher for most of this year.
Source: The Conference Board , S&P and Wells Fargo Securities