Consumer Confidence Remained Strong in July
The Consumer Confidence Index from The Conference Board rose slightly in July, up 0.2 points to 129.1, the highest level since February 2020 and in a range consistent with strong economic growth (see chart).
The two major components of the index had small changes for the month, both remaining at relatively high levels. The present-situation component rose 0.7 points to 160.3, the highest level since March 2020.
The expectations component lost 0.1 points, taking it to 108.4 (see chart). The details of the report suggest that consumers remain generally optimistic particularly as dwindling government restrictions boost economic activity.
Regarding current general business conditions, the percentage of consumers saying business conditions were good rose 1.2 points to 26.4 while the percentage of those saying business conditions were bad rose 0.2 percentage points to 19.3. Those results left the net business conditions percentage at 7.1, up 1.0 from the prior month.
For the labor market, the net percentage of consumers saying jobs were plentiful gained 0.2 points to 54.9 while those saying jobs were hard to get was unchanged at 10.5. The net percentage for current labor conditions comes in at 44.4 for July, up from 44.2 in June and well above the -15.7 in April 2020.
Regarding consumer expectations, consumers’ expectations for business conditions in six months, the percentage expecting good conditions fell 0.3 points to 33.4 while the net percentage expecting bad conditions fell 0.3 points to 10.5. The net percentage for business conditions six months ahead was unchanged at 22.9.
Net consumer expectations for the labor market were also unchanged, as the percentage expecting more jobs added 1.1 points to 27.7 while the percentage expecting fewer jobs also added 1.1 points to 16.8. The net percentage for the outlook for jobs was unchanged at 10.9.
Expectations for future income improved with 20.6 percent expecting an increase while 8.6 percent expect a decrease, leaving the net percentage at 12.0 percent. That positive result helped support future buying plans as percentages for buying a home, auto, or major appliance all rose in the latest month.
Overall, the survey results suggest consumer attitudes remained at favorable levels and are consistent with continued economic growth. Reduced government-enforced restrictions on consumers and businesses are driving stronger economic activity and boosting consumers’ views of current conditions and expectations for the future.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
