US consumer confidence reached a six-month high in August, buoyed by more positive perceptions of the economy and easing inflation, despite growing concerns about the labor market. The Conference Board’s consumer sentiment index increased to 103.3, up from a revised 101.9 in July, surpassing the median forecast of 100.7 from economists surveyed by Bloomberg.
The report highlighted a boost in expectations for the next six months, with that measure reaching a one-year high of 82.5. Current conditions also saw a modest improvement. The prospect of anticipated interest rate cuts by the Federal Reserve, potentially starting next month, could further lift consumer sentiment and support continued spending. However, overall confidence still lags behind pre-pandemic levels, largely due to persistent cost-of-living pressures and slowing job growth.
“While consumers remain generally positive about the current labor situation, there’s a noticeable decline in optimism about future job prospects,” noted Dana Peterson, chief economist at the Conference Board. “This likely reflects the recent uptick in unemployment, coupled with a slightly more cautious outlook on future income.”
In August, only 32.8% of consumers described jobs as “plentiful,” marking the smallest share since March 2021 and the sixth consecutive monthly decline. Conversely, the percentage of respondents indicating that jobs are “hard to get” saw a slight increase. The gap between these two metrics—a key indicator closely watched by economists to assess labor market health—narrowed to its lowest point in over three years.
Federal Reserve officials and economists are paying close attention to labor market trends, especially after Fed Chair Jerome Powell acknowledged last week that while inflation risks are receding, the risks to employment are on the rise. Powell emphasized that the Fed does not “seek or welcome a further cooling” in the job market.
The survey revealed that 31.5% of respondents expect lower interest rates within the next year, the highest proportion since April 2020. Additionally, inflation expectations have moderated among consumers.
However, consumer sentiment towards the stock market softened, likely a reaction to the volatility seen in early August. The market experienced a $6.4 trillion global selloff following a disappointing jobs report but has since rebounded.
The report also indicated a decline in purchasing plans for big-ticket items like automobiles and major appliances. Homebuying intentions remained subdued, reflecting the ongoing challenges of high prices and elevated borrowing costs.
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