Consumer Confidence Rises in August Despite Labor Market Worries

New York—U.S. consumer confidence rose overall in August even though respondents expressed concerns about the labor market.

The Conference Board’s monthly consumer confidence index increased to 103.3 in August from an upwardly revised 101.9 in July.

“Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board.

Write-in responses in August included more mentions of stock prices and unemployment as affecting consumer’s views of the U.S. economy, she said.

Higher prices and inflation remained the top concern among survey-takers who included write-in responses.

The share of respondents believing the 2024 elections would impact the economy held steady from last month, said the Conference Board, noting it was slightly higher than 2020 levels but well below the August 2016 level.

Consumers’ outlook on a possible recession also was unchanged, said the Conference Board, and the level remained “well below” its 2023 peak.

While overall consumer confidence was on the rise, respondents had mixed feelings in August.

Consumers were more positive about current and future business conditions but expressed concerns about the labor market.

“Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic,” said Peterson.

“This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income.”

By age group, consumers under 35 saw confidence decline while those 35 and older saw it increase.

On a six-month moving average basis, however, confidence remained the highest among young consumers, said Peterson.

By income group, confidence declined for those earnings less than $25,000 while consumers earning more than $100,000 remained the most confident.

Confidence among consumers earning $15,000 to $24,900 continued to trend down and was almost as low as for those earning less than $15,000, said Peterson.

The Conference Board’s average 12-month measure of inflation expectations declined slightly to 4.9 percent from 5.4 percent in July.

It marks the lowest level since March 2020 and is consistent with slower overall inflation and declines in the prices of some goods, said the Conference Board.

The share of consumers expecting interest rates to increase over the next 12 months dropped for the third month in a row to 47 percent, marking its lowest point since February.

Those who expect lower rates rose to 32 percent, the highest since April 2020.

The Present Situation Index, which measures consumers’ current view of business and labor market conditions, rose to 134.4 in August from 133.1 in July.

Consumers’ assessments of current business conditions were more positive in August while their view of the labor market weakened.

The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, rose to 82.5 from an upwardly revised 81.1 in July.

A reading below 80 normally signals a recession in the near future, the Conference Board noted.

Consumers were more optimistic about business conditions in August, while their outlook on the labor market and their income prospects were more pessimistic.

They also were less optimistic about their family’s current financial situation, a measure not included when calculating the Present Situation and Expectations Index.

However, their view of their family’s future financial situation improved looking to the next six months.

“Consumers were likely rattled by the financial market turmoil in early August, as they were less upbeat about the stock market,” said Peterson.

In August, 47 percent of respondents said they expect stock prices to increase over the year ahead, down from 51 percent in July, while 27 percent expect a decrease, up from 23 percent.

The number of consumers who said they plan to buy a home fell to a new 12-year-low in August, while plans to buy cars increased slightly.

Buying plans for most big-ticket appliances were up on average, with gains driven by a few items including refrigerators, TVs, and washing machines.

The number of consumers who said they plan to buy a smartphone, laptop, or personal computer also increased.