The Conference Board’s monthly snapshot of consumer attitudes improved, rising to 103.2 from a revised 95.3 in July. The August figure matches the level it reached in May and marks the first time since then that the headline index has surpassed 100, the historical baseline.
“In the first half of the year, there were shocks to consumers from gas prices, the stock market and mortgage rates,” said Bill Adams, Comerica Bank chief economist. “Consumers look very reassured that the trend has not gotten worse.”
The survey found that Americans are less pessimistic in both their current and future economic outlook. The Current Situation Index, which measures how people perceive current business and labor market conditions, rose to 145.4 from 139.7 the previous month.
The expectations index rose to 75.1 from 65.6, reflecting a reversal from pessimism in the short-term outlook for consumers, which hit a nine-year low in July.
“Expectations are more sensitive to fluctuations in gasoline prices, adding that continued slide in gasoline prices could be a headwind for the survey results,” Shepherdson said in a research note. “We expect further increases in September due to the delayed impact of the resulting gas price drop.“
This shows that American perceptions play an important role in the future trajectory of the economy.
Lynn Franco, Senior Director of Economic Indicators at the Conference Board noted that, despite the improvement, the low expectations reading suggests a recession threat continues to weigh on the economy. .
“Recession risks persist. Inflation concerns continue to decline but remain high,” she said.
Both the Consumer Price Index and the Personal Consumption Price Index – the Fed’s preferred measure of inflation – show moderation in their most recent readings. That’s a good sign, said Liz Young, head of investment strategy at SoFi.
However, while consumer confidence numbers are promising, “this is a month,” she warned. “Actually, we need three consecutive months of cooling down. Consumer confidence is a pretty fickle number.”
“Although gas prices have dropped in recent weeks, there’s still a chance the bumpy ride could get worse,” he said, if a Gulf Coast hurricane or other energy storm from Russia were to trigger it, he said. an energy shock, he said.
Sam Stovall, chief investment strategist at CFRA Research, said higher prices would then be challenging for consumers. “It could increase the likelihood and then the potential severity of a recession, depending on how high gasoline prices go and for how long.”
As this spring and early summer made clear, pump pain is a dual problem for the economy: People have less money to spend, and the fear of job loss or higher prices in the future. future makes them not want to spend the money they have. when making a custom purchase.
“It’s a real drain on disposable income [and] It will act as an agent that undermines consumer confidence, Stovall said.
