The Conference Board said that consumer sentiment rebounded to its highest level since January. The Consumer Confidence Index increased from 101.3 in August to 103.0 in September, just shy of the 103.8 reading that was notching at the beginning of the year. The January figure had been the strongest figure since August 2007, suggesting that consumers are near a pre-recessionary high in terms of current confidence levels. With that said, Americans’ attitudes about the economy have been highly volatile so far this year, ranging from a low of 91.0 in July to its January peak. Much of the weakness that we have seen year-to-date has stemmed from worries about labor and income growth. This is true despite progress over the longer term, with the index up from 80.2 in September 2013 and 89.0 in September 2014.
Respondents to the current survey were somewhat more upbeat about employment prospects. The percentage saying that jobs were “plentiful” rose from 19.9 in July to 25.1 percent in September. Of course, you must also compare that to the figure saying that jobs were “hard to get,” which rose from 21.7 percent in August to 24.3 percent in September. The good news on that front is that the differential between the two categories is positive for just the second time in seven years. Along those lines, 19.1 percent of those completing the survey anticipate higher incomes moving forward, up from 16.2 percent last month. At the same time, 10.1 percent predict lower incomes in the months ahead.
Buying plans were somewhat mixed. Consumers were more likely to purchase an automobile (up from 10.8 to 12.7 percent) or a home (up from 4.4 to 6.3 percent). Home buying intentions improved to their fastest pace of the year so far. In contrast, the public was less likely to purchase an appliance (down from 49.5 to 48.0 percent). Yet, if confidence does continue to rise, this should boost overall consumer spending moving forward.
Chad Moutray is the chief economist, National Association of Manufacturers.