The Consumer Confidence Index from The Conference Board rebounded in July, increasing by 11.4 points to 135.7, the highest level of the year and the highest since November. The index is constructed so that it equals 100 in 1985. The composite index is just 2.2 points below the cycle high of 137.9 in October 2018 and 9 points below the all-time record of 144.7 in May 2000 (see top chart).
Both components of the index posted gains for the month. The present-situation component rose 6.6 points to 170.9, the highest since February and the 22nd month above 150, a very strong run. This index has posted a remarkable rebound, rising 150.7 points from a low of 20.2 in December 2009, just after the end of the Great Recession (see top chart again).
The expectations component added 14.6 points, taking it to 112.2 from 97.6 in the prior month. The expectations index has been a bit more restrained compared to the present-situation index but has risen sharply from a reading of 27.3 in July 2009. The index has been holding around the 100 level since December 2016, averaging 104.7 over the last 32 months and staying within a range of 90 to 115. The all-time high for the expectations component is 125.8, recorded in April 1967.
Overall, consumer attitudes remain at historically favorable levels, driven by solid gains in income and a tight labor market. The persistently high level of consumer confidence is a positive sign for consumer spending and the economy overall.
The S&P Case-Shiller National Home Price Index rose 0.3 percent in May, pushing the 12-month change to 3.5 percent. Home prices have been moving consistently higher since February 2012, surpassing the February 2007 high during the housing bubble in December 2016 (see bottom chart). Home prices are now 13.2 percent above the February 2007 high. High home prices are a major reason for the generally moderate pace of home sales and new home construction, offsetting the positive benefits of relatively low mortgage rates and solid consumer fundamentals of low unemployment, rising incomes, and high consumer confidence. Given the countervailing forces, housing is unlikely to contribute significantly on a sustained basis to economic growth.