United States: Consumer confidence jumps to 18-year high in August
Consumer confidence leaped to new highs in August, following the small increase recorded in the previous month. The Conference Board’s monthly consumer confidence index soared from July’s upwardly revised 127.9 (previously reported: 127.4) to 133.4, the highest print since October 2000. The figure vastly exceeded the expectations of market analysts, who had seen the index falling to 126.8. It also rose further above the 100-point threshold that separates consumer optimism from pessimism.
The increase in optimism among consumers in August was broad-based, with both the present situation index and the expectations index posting strong gains, indicating an exceptional level of optimism regarding the current state of the domestic economy and an overall positive outlook in the near term. The current strength of the labor market, which has continued to add jobs at a solid pace for the longest uninterrupted streak on record, remained one of the main factors underpinning consumer optimism in August. Indeed, 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 from 27.9 in July to 30.0 in August. Meanwhile, the share of respondents who would characterize business conditions as “good” increased, while the proportion of those who perceived them as “bad” declined.
Consumers’ short-term expectations also improved, following two consecutive months of decline in June and July which had raised concerns about a possible loss of momentum in private consumption in H2 2018. In August, the percentage of respondents who anticipated business conditions to improve over the next six months increased, while the share expecting conditions to deteriorate was broadly stable. Furthermore, consumers were markedly more optimistic regarding their own income prospects over the near future, a strong positive sign for household consumption in the months to come. However, their assessment of the labor market outlook was more mixed, with both the share of optimistic and pessimistic respondents declining in August.