Consumer Confidence Reflects Brexit Shrug-Off
The Conference Board, New York, said its Consumer Confidence Index rebounded in August after a slight decrease in July.
The Index improved to 101.1, the highest level in nearly a year, compared to 96.7 in July. The Present Situation Index rose from 118.8 to 123.0, while the Expectations Index improved from 82.0 last month to 86.4.
“Consumers’ assessment of both current business and labor market conditions was considerably more favorable than last month,” said Lynn Franco, director of economic indicators with The Conference Board. “Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”
“Consumers largely shrugged off any lingering concerns about the Brexit vote and the temporary turmoil it unleashed,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “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, Vitner added, 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 spending 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.”
The report said consumers’ appraisal of current conditions improved in August. Those stating business conditions are “good” increased from 27.3 percent to 30.0 percent, while those saying business conditions are “bad” remained virtually unchanged at 18.4 percent. Consumers’ assessment of the labor market was also more favorable. Those claiming jobs were more “plentiful” increased from 23.0 percent to 26.0 percent, however, those claiming jobs are “hard to get” also rose, from 22.1 percent to 23.4 percent.
Consumers’ optimism regarding the short-term outlook picked up in August. The percentage of consumers expecting business conditions to improve over the next six months increased from 15.7 percent to 17.3 percent, while those expecting business conditions to worsen decreased from 12.4 percent to 11.1 percent.
Consumers’ outlook for the labor market was also more favorable than in July. The proportion expecting more jobs in the months ahead rose from 13.5 percent to 14.2 percent, while those anticipating fewer jobs remained virtually unchanged at 17.5 percent. The percentage of consumers expecting their incomes to increase improved from 17.1 percent to 18.8 percent, while the proportion expecting a decline decreased marginally from 11.0 percent to 10.7 percent.
