US Consumers Financial Stress Falls to All-Time Low on Rising Incomes
- August Consumer Confidence (actual 133.4, consensus 126.5, prior 127.9)
Note: August marks the 2nd time this year that financial stress levels have reached an all-time low, with the previous instance occurring in May, when the Index dropped to 49.9. Further, our stress indicator has fallen 13% over the past year, as more Americans begin to feel in their own lives the effects of a re-surging economy, particularly in the form of higher wages.
Americans’ consumer confidence rose in August to the highest level in nearly 18 years as their assessment of current conditions improved further and their expectations about the future rebounded.
The Conference Board reported Tuesday that its consumer confidence index rose to 133.4 in August, up from a reading 127.9 in July. It was the highest reading since confidence stood at 135.8 in October 2000.
Consumers’ confidence in their ability to get a job and the overall economy are seen as important indicators of how freely they will spend, especially on big-ticket items such as cars, in coming months.
Consumer spending accounts for roughly 72 of US economic activity.
“Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018,” said the director of economic indicators at the Conference Board. “These historically high confidence levels should continue to support health consumer spending in the near term.”
The overall economy, as measured by the gross domestic product, grew at a 4.1% rate in the April-June frame, the best performance since Y2014. That estimate will be revised Wednesday. Many economists believe growth has slowed a bit in the current quarter to around 3%, but will remain far ahead of the weak 2.2% GDP growth rate in the Q-1.
“Confidence is soaring to new heights which makes us bullish on growth and forecasts that this expansion may indeed shatter records for longevity next Summer,” said the chief financial economist at MUFG Union Bank in New York.
Keeping America Great!