The Conference Board said that consumer sentiment jumped strongly in August, rebounding from the sharp decline seen in July. The Consumer Confidence Index, which unexpectedly fell significantly from 99.8 in June to 91.0 in July, recovered in August, rising to 101.5. This was the second-highest level since August 2007 – second only to January’s 103.8 reading. The improvement in this report stemmed largely from the public’s better assessment of the labor market. For instance, 21.9 percent of respondents said that jobs were plentiful, up from 19.9 percent the month before. More importantly, the percent noting that jobs were “hard to get” fell from 27.4 percent to 21.9 percent.
Nonetheless, even with improved confidence overall, Americans remained cautious in their outlook for the future. Along those lines, the percent expecting an increase in income moving forward declined from 17.0 percent in July to 16.2 percent in August. On the positive side, those anticipating decreased incomes also fell, down from 11.3 percent to 10.0 percent.
This cautiousness must also carry through to purchasing intentions, with the percent planning to buy an auto (down from 11.8 percent to 10.6 percent), home (down from 5.9 percent to 4.1 percent) and/or appliance (down from 52.1 percent to 48.9 percent) all moving lower. Hopefully, the strong gains in consumer confidence translate into increased spending down the line – something that we would look for in upcoming releases.
Chad Moutray is the chief economist, National Association of Manufacturers.