United States: Consumer confidence edges up in July on improving current conditions
July 31, 2018
Consumer confidence ticked up marginally in July, contrasting the modest decline recorded in the previous month. The Conference Board’s monthly consumer confidence index inched up from June’s upwardly revised 127.1 (previously reported: 126.4) to 127.4. The figure exceeded market analysts’ forecasts, which had seen the index remaining broadly stable at 127.0, and remained well above the 100-point threshold that separates consumer optimism from pessimism.
The increase in optimism among consumers in July was driven by a more optimistic view of current conditions, with the Present Situation Index jumping sharply to a 17-year high. While this signals that household spending should remain extremely resilient in coming months, consumers’ outlook for the near future deteriorated to its least optimistic reading of the year, not far from the threshold that separates positive from negative sentiment. Furthermore, the deterioration in the outlook followed a similar drop in the previous month. According to Lynn Franco, director of economic indicators at The Conference Board, “back-to-back declines suggest consumers do not foresee growth accelerating”.
Looking at the details, the share of respondents who would characterize business conditions as “good” increased, while the proportion of those who perceived them as “bad” declined. Meanwhile, the labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—increased to 28.1 in July from 25.4 in June.
Short-term expectations, however, were mixed in July. A higher percentage of respondents expected more jobs in the coming months, but the share of pessimistic respondents also increased. The same dynamic was at play regarding consumers’ expectations of future business conditions, and of their personal income prospects; both the proportions of pessimistic and optimistic respondents increased.
United States Private Consumption Forecast
FocusEconomics Consensus Forecast panelists expect private consumption to grow 2.5% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, the panel sees private consumption growth moderating to 2.3%.
Author: Joffrey Simonet, Economist