The Conference Board said that consumer sentiment ebbed slightly in July, but Americans still remain more upbeat than they were earlier this year. The Confidence Index declined from 82.1 in June to 80.3 in July. Despite the marginal decrease, both figures still rank as the highest points since January 2008, when confidence was unfortunately headed in the wrong direction. Moreover, the index has risen from 58.4 in January to its current level, suggesting an overall upward trend.
Nonetheless, the July decrease was due to a modest fall in perceptions about the future economy. The expectations component declined from 91.1 to 84.7, still a decent figure. Meanwhile, respondents continued to become more upbeat in their assessments of the current economy, with the present conditions index up from 56.2 in January to 68.7 in June to 73.6 in July.
Those completing the survey cited improvements in the labor market. The percentage of those saying jobs were plentiful increased from 11.3 percent to 12.2 percent. This was up from just 8.5 percent who said as much in January. Still, responents recognize that the labor market continues to have significant challenges. For instance, 35.5 percent found that jobs were hard to get, and the questions about what they expect to happen with regard to their income were mixed.
The good news is the increase in consumer confidence appears to translate into improved buying intentions, at least on paper. There were increases in the percentages of respondents who said that they plan to purchase new autos, homes, and appliances in the July report. Of course, that differs somewhat from the Census data, which found that retail sales were down slighly in June when you exclude autos and gasoline station sales from the analysis. Hopefully, the July retail sales figures, out on August 13, will reflect more broad-based gains.
One final concluding thought is that the consumer confidence data, both in this release and in last week’s report from the University of Michigan, do not seem to reflect the higher gasoline prices that we have experienced lately. Historically, this would be enough to cause a decrease in sentiment, and perhaps it did here in the expectations variable. But, overall, the trend remains a positive one, with consumer confidence at levels not since in at least five years.
Chad Moutray is the chief economist, National Association of Manufacturers.