Optimistic Consumers in August
On Tuesday the Conference Board reported the Consumer Confidence Index for August. The index rose and consumers were quite optimistic about both the current situation and the near term outlook.
The Consumer Confidence Index rose to 101.1, from 96.7 in July. The present situation index rose to 123.0, from 118.8, and the expectations index increased to 86.4, from 82.0.
Unlike the mixed assessments last month, consumers’ assessments of current business conditions were very clear in August. Assessments shifted to the extreme of “good” from “bad” and “normal.” The share of respondents rating business conditions “good” rose from 27.3 percent to 30.0 percent, with net declines in respondents assessing business conditions “bad” and “normal.”
Consumers became more optimistic about business conditions over the next six months. The share of respondents expecting future business conditions to be better rose 1.6 percentage points, from 15.7 percent to 17.3 percent. Most of the increase, 1.3 percentage points, came from a net decline in respondents expecting future business conditions to be worse and the rest came from a net decline in respondents expecting future business conditions to be the same.
Consumers’ assessments of current employment conditions improved but were mixed. The share of respondents reporting that jobs were “not so plentiful” decreased from 54.9 percent to 50.6 percent. Most of the 4.3 percentage point decline (3 percent) was the result of a net increase in assessments of “jobs plentiful,” an upgrade, while the rest was the result of a net increase in assessments of “jobs hard to get,” a downgrade.
Similar to consumers’ assessments of current employment conditions, expectations of employment over the next six months were mixed. The share of respondents expecting “same jobs” declined by 0.8 percentage points. Most of the decline (0.7 percent) upgraded to “more jobs,” while the rest downgraded to “fewer jobs.”
The Conference Board also reports the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home rose to 6.4 percent, from 5.1 percent. The share of respondents planning to buy a newly constructed home and an existing home were 1.4 percent and 3.5 percent, respectively; the share of respondents who were “uncertain” whether they would buy a newly constructed or an existing home was 1.5 percent.
The trend in the share of respondents planning to buy a home within six months has been steadily upward since the end of the recession, suggesting growing optimism among consumers about the housing market.
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