Wednesday Aug 28 2024 07:56
3 min
In August, the U.S. consumer confidence index climbed to a six-month high as optimism about the economy and inflation offset a decline in optimism about the labor market.
Data released on Tuesday showed that the Conference Board Consumer Confidence Index rose to 103.3 from a revised 101.9 in the previous month, surpassing the market expectation of 100.7. The expectations index, reflecting short-term outlooks on income, business conditions, and the labor market, also improved to 82.5 in August.
The Federal Reserve's anticipated rate cut next month could further boost consumer confidence and sustain spending. However, consumer confidence remains significantly below pre-pandemic levels due to rising living costs and recent slowdowns in job growth.
Dana M. Peterson, Chief Economist at the Conference Board, noted, "While consumers' assessment of the current labor market remains positive, it continues to weaken, and the outlook for future labor market conditions has become more pessimistic, possibly reflecting recent increases in unemployment. Optimism about future income has also slightly declined."
Consumers' views on the current labor market have cooled, with only 32.8% indicating ample job opportunities, a new low since March 2021, marking the sixth consecutive month of decline. The proportion of those finding jobs difficult to obtain has also risen, bringing the gap between these indicators to its lowest level in over three years.
Peterson mentioned that consumer sentiment towards the stock market is also less optimistic, reflecting volatility from early August, when a disappointing jobs report triggered a $6.4 trillion global stock sell-off, though the market has since rebounded.
Federal Reserve Chairman Powell stated last week that the Fed is "not seeking nor welcoming further cooling," and both the central bank and economists are closely monitoring changes in the labor market. Powell acknowledged rising risks to employment while noting a decline in inflation risks.
The report indicated that consumers' plans to purchase vehicles and major appliances have decreased from the previous month, and housing intentions remain weak due to high home prices and borrowing costs.
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