American consumers showed increased confidence in August due to a more positive outlook for the future. The Conference Board announced on Tuesday that the consumer confidence index rose to 103.3 in August from 101.9 in July. This index assesses both current economic conditions and the forecast for the next six months.
The short-term expectations for income, business, and the job market among Americans improved to 82.5 in August. July’s figure was adjusted upward to 81.1 from the initial reading of 78.2, breaking a five-month streak below 80, which could indicate an impending recession.
The view of current conditions also saw an increase to 134.4 in August from 133.1 in the previous month. Consumer spending, accounting for nearly 70% of the U.S. economic activity, is closely monitored by economists to gauge consumer sentiment.
Despite the slight improvement in overall numbers from July, consumers still held mixed feelings about the economy. The Conference Board’s chief economist, Dana Peterson, mentioned concerns about the weakening labor situation and more pessimistic views on the labor market’s future trajectory.
These sentiments were likely influenced by the July jobs report showing slowed job growth and an increase in the unemployment rate to 4.3%. Furthermore, recent government data revealed a significant revision to job numbers, indicating a steady slowdown in the job market.
Although inflation has eased from its peak in 2022, essential costs continue to impact Americans’ savings and optimism. The Conference Board’s survey responses highlighted ongoing worries about prices and inflation, even as 12-month inflation expectations dropped to their lowest since March 2020 amid the pandemic.
The Federal Reserve, which began raising its benchmark lending rate in March 2022 to combat rising inflation, is now considering an interest rate cut at its September meeting. This potential decision offers hope for relief to both consumers and businesses grappling with higher borrowing costs and escalating prices over the past two years.
