Consumer Confidence Holds Steady In July
After registering increases for the past five months, consumer confidence levels held relatively steady in July. The Conference Board’s Consumer Confidence Index reached 129.1 last month, up from 128.9 in June.
“Consumer confidence was flat in July but remains at its highest level (132.6) since February 2020,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start. Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs and personal financial prospects will improve. Short-term inflation expectations eased slightly but remained elevated. Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles and major appliances in the coming months. Thus, consumer spending should continue to support robust economic growth in the second half of 2021.”
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose from 159.6 to 160.3 in July. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—was virtually unchanged at 108.4, compared to 108.5 one month earlier.
Consumers’ appraisal of current business conditions improved slightly in July, with 26.4 percent of them saying business conditions are “good,” up from 25.2 percent one month earlier. However, the percentage of consumers who said business conditions are bad also ticked up, from 19.1 percent to 19.3 percent. Consumers’ assessment of the labor market was relatively flat—54.9 percent of consumers said jobs are “plentiful,” in the July survey up from 54.7 percent, and 10.5 percent said jobs are “hard to get,” unchanged from June.
Looking ahead over the next six months, consumers’ optimism about the short-term business conditions outlook eased slightly in July. The Conference Board reports that 33.4 percent of consumers expect business conditions to improve, down from 33.7 percent, but 10.5 percent expect business conditions to worsen, down from 10.8 percent.
Regarding the short-term labor market in July, consumers’ perceptions were mixed, with 27.7 percent expecting more jobs to be available in the months ahead, up from 26.6 percent. Conversely, 16.8 percent anticipate fewer jobs, up from 15.7 percent. Regarding their own short-term financial situations, consumers remained upbeat. The survey found that 20.6 percent of consumers expect their incomes to increase, up from 20 percent, and only 8.6 percent expect their incomes to decrease, up from 8.4 percent.