US Consumer Confidence Improves, Labor Market Anxiety Looms — Evening Brief – 08.27.24
The Conference Board released a report on Tuesday unexpectedly showing an improvement in consumer confidence in August as Americans maintained a balance between their optimism regarding the economy’s future and their anxiety about the labor market.
The consumer confidence index increased to 103.3 in August from an upwardly revised 101.9 in July, with the expectations gauge adjusted significantly higher for July and even higher in August. Economists projected the index to fall to 100.1 from the 100.3 posted the previous month.
“Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board.
“Consumers continued to express mixed feelings in August,” she added. “Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market.”
The Conference Board revealed that the present situation index rose to 134.4 in August from 133.1 in July, while the expectations index, which looks ahead six months, increased to 82.5 in August from 81.1 in July.
However, the present situation index remains near COVID lows, which may be explained by the weaker overall pattern in the labor market indicator. But the expectations index marked the second straight month it is above 80 – a reading below 80 usually indicates a recession ahead.
Consumers were less optimistic about the labor market. The percentage of consumers who saw jobs as “plentiful” fell to 32.8% from 33.4% in July, while 16.4% of consumers said jobs were “hard to get,” up from 16.3% last month.
The survey’s labor market differential, which is based on respondents’ perceptions of whether jobs are plentiful or difficult to obtain, fell to 16.4, the lowest since March 2021, from 17.1 in July.
“Consumers were likely rattled by the financial market turmoil in early August, as they were less upbeat about the stock market,” said Peterson. “August’s write-in responses also included more mentions of stock prices and unemployment as affecting consumer’s views of the U.S. economy.”
“However, consumers did not change their views about a possible recession: the proportion of consumers predicting a recession was stable and well below the 2023 peak,” she added.
On Friday, the University of Michigan will release its revised consumer sentiment reading for August, which is projected to be revised to 68.0 from the preliminary estimate of 67.8, which was up from 66.4 in July.