By Nathalie Voit
Consumer confidence improved in August after three consecutive months of decline, The Conference Board said in its monthly Consumer Confidence Survey.
The Index now stands at 103.2, up from 95.3 in July.
The Present Situation Index, which tracks consumers’ assessment of current business and job market conditions, improved to 145.4 in August from 139.7 the previous month.
The Expectations Index, which reflects consumers’ short-term outlook for the U.S. economy, rose to 75.1 in August from 65.6 in July.
The Expectations Index and the Present Situation Index make up The Conference Board’s Consumer Confidence Index.
“Consumer confidence increased in August after falling for three straight months,” Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said in a press release. “The Present Situation Index recorded a gain for the first time since March. The Expectations Index likewise improved from July’s 9-year low but remains below a reading of 80, suggesting recession risks continue. Concerns about inflation continued their retreat but remained elevated.”
“Meanwhile, purchasing intentions increased after a July pullback, and vacation intentions reached an 8-month high. Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term,” Franco added.
Compared to July, consumers’ view of the current business environment was more favorable last month. About one in five consumers (19.2%) classified business conditions as “good” in August, up from 16.3% in July.
Consumers’ appraisal of the labor market received mixed reviews. Almost half of consumers (48%) said jobs were abundant in August, down from 49.2%. However, fewer consumers said jobs were “hard to get” in August than in July (11.4% vs. 12.4% in July).
Consumers’ near-term outlook for business conditions advanced in August. Some 18% of consumers expect business conditions to improve in the next six months, up from 13.7% in July.
Consumers’ short-term prospects for employment also improved. Seventeen percent of consumers expect more jobs to be available soon, up from 15% in July.
Consumers’ concerns regarding their own financial situation were also ameliorated. Looking six months ahead, 15.8% of consumers expect their incomes to increase, up from 15.3% in July.
However, inflation remains an issue.
Robert Hughes of the American Institute for Economic Research notes that near-term inflation expectations remain extremely elevated “as prices for goods and services continue to rise” at an expedited pace.
“The extreme outlook for inflation is a key driver of weaker consumer expectations,” Hughes said.
