The Conference Board reported Tuesday morning that its consumer confidence index for the month of August rose from 127.9 in July to 133.4. The expectations index increased from 102.4 to 107.6, and the present situation index rose from 166.1 to 172.2. The consensus estimate for August called for a slight dip to an index reading of 126.5.
The assessment of present-day conditions improved again in August. The percentage of consumers who said business conditions are “good” rose from 38.1% to 40.3%, while those claiming business conditions are “bad” declined from 10.3% to 9.1%.
Consumers’ assessment of the August labor market also improved. The proportion stating jobs are “plentiful” was unchanged at 42.7%, while those claiming jobs are “hard to get” dropped from 14.8% to 12.7%.
Lynn Franco, director of economic indicators at the Conference Board, said:
Consumer confidence increased to its highest level since October 2000 (Index, 135.8), following a modest improvement in July. Consumers’ assessment of current business and labor market conditions improved further. Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018. Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.
Many economists are forecasting a slowdown in the U.S. economy in the second half of this year. Partly that’s due to expected effects of the Trump tariffs and partly to the lack of growth in real wages. Consumers also could be overlooking the effects of slowly rising inflation unaccompanied by pay increases.
On the jobs front, expectations for new jobs dipped from 22.6% to 21.7% in August but so did the number of respondents who expect fewer jobs, from 15.2% to 14.1%. Regarding their own income, 25.5% expect an improvement in the short term, up from 20.4% in July. The proportion expecting a decrease in income fell from 9.4% to 7%.
Optimism about the short-term outlook rebounded in August. The percentage of consumers expecting business conditions to improve over the next six months increased from 22.9% to 24.3%; those expecting business conditions to worsen also rose slightly, from 10.3% to 10.5%.
The Conference Board’s Consumer Confidence Survey is based on a probability-design random sample and is conducted for The Conference Board by Nielsen. The index baseline is 1985=100.