The Trump Economy: Consumer Confidence Rises 18-Year High
US consumer confidence rose to an 18-year high in September as households grew more upbeat about the labor market, pointing to sustained strength in the economy despite an increasingly bitter trade dispute between the US and China.
While other data Tuesday showed a moderation in house price increases in July, the gains probably remain sufficient to boost household wealth and continue to support consumer spending, as well as making home purchasing a bit more affordable for first-time buyers.
The US consumer is always in the driver’s seat when it comes to stoking the fires that run the engines of economic growth
The Conference Board said its consumer confidence index increased to a reading of 138.4 this month from an upwardly revised 134.7 in August. That was the best reading since September 2000 and the index is not too far from an all-time high of 144.7 reached that year.
Five years ago, it was at 77.5.
Economists polled by Reuters had forecast the consumer index slipping to a reading of 132.0 this month from the previously reported 133.4 in August.
US consumers’ assessment of labor market conditions improved sharply even as the trade dispute between the United States and China escalated, which economists warned would lead to job losses and higher prices for consumers.
Monday, Washington simposed tariffs on $200-B worth of Chinese goods, with Beijing retaliating with duties on $60-B worth of US products. The United States and China had already imposed tariffs on $50 billion worth of each other’s goods.
US consumers are shrugging off the trade tensions.
Households were this month upbeat about business conditions over the next six months, with many planning purchases of household appliances, motor vehicles and houses.
Some economists believe a tightening labor market, which is starting to boost wage growth, and higher savings could provide a cushion for households against more expensive consumer goods imports from China.
Consumers may choose to substitute purchases of goods affected by tariffs with other goods and firms may choose to absorb the higher costs. Stay tuned…
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