July’s Consumer Confidence Research Notes

by Jim Baird on July 26, 2016

CCConsumer confidence holds steady in July, easily beating expectations

Consumers remained in an upbeat mood in July, as the Conference Board Consumer Confidence Index was virtually unchanged from the prior month at 97.3, dipping just 0.1 from the June reading of 97.4.  That result easily exceeded consensus expectations for larger decline.

Consumers were modestly more optimistic about their current situation, as the Present Situation index came in at 118.3, well above the headline result.  On the other hand, they remain more skeptical about the road ahead, which has been the case for some time; the Expectations Index dipped modestly to 83.3 for the month.

The fact that the index was virtually unchanged reaffirms a degree of resilience on the part of consumers.  The potentially negative impact of the Brexit vote and the resulting volatility in global equity markets was likely blunted by the subsequent bounce back, mitigating any negative wealth effect from the immediate selloff.

Strong job creation in June coupled with the extended period of low jobless claims continue to point to solid labor market conditions, further boosting the collective mood of households.

Retail sales were up 0.6% in June, making combined retail sales growth for the second quarter the strongest three-month gain since last May.  As long as consumers remain relatively upbeat, retail sales and broader consumption measures should benefit.

While confidence can have a meaningful impact on short-term consumer spending trends, in the long run actual spending activity is tied more closely to income growth.  Average hourly earnings increased by 2.4% year-over-year in June, and when coupled with firming inflation data, could be poised for continued growth throughout the remainder of the year, supporting consumer spending and overall economic growth.

The bottom line is that the outlook for consumers looks good, supported by a growing economy, generally solid labor market conditions, an improving wage outlook, manageable debt levels, and moderate inflation. Near-term market volatility may give households reason for pause, but consumer spending should remain a key support for the economy in the coming quarters.

Economic Perspectives (Second Quarter 2016)

by Jim Baird on July 18, 2016

This quarter, we review the current U.S. economic expansion within a historical context, along with a number of other economic indicators, to provide insight on expectations for the balance of the year. While the outcome of the Brexit vote is expected to be a near-term negative for the British economy, the economic impact here in the U.S. should be limited.

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Consumer Sentiment Research Notes

July 15, 2016

Sentiment dips unexpectedly in July The collective mood of consumers moderated in early July, as the outcome of the Brexit vote introduced a greater element of uncertainty, particularly among high income earners. The University of Michigan Consumer Sentiment Index dipped unexpectedly to 89.5 in July from 93.5 in June. Economists had expected a much more […]

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Market Perspectives (July 2016)

July 15, 2016

Executive Summary The leading story this month was Brexit, which sent shockwaves through capital markets — a two-day drop of 5% or more across major indices — as the U.K. unexpectedly voted to leave the European Union. Domestic stocks rebounded by the end of June, however, led by mid-caps, which achieved a 0.5% return, followed […]

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Jobless Claims (week of 7.9.16) Research Notes

July 14, 2016

Jobless claims flat for the week Initial jobless claims were flat for the week ended July 9, matching the previous week’s print of 254,000. The 4-week average for jobless claims dipped to 259,000, continuing its downward trend in recent weeks. Generally, a jobless claims level of below 300,000 is viewed as indicative of a healthy […]

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June’s Employment Situation Research Notes

July 8, 2016

Job creation soars in June; unemployment rate edges higher to 4.9% A month ago, the employment situation report indicated that job creation had stalled; today’s report tells a very different story, as payrolls soared by nearly 300,000 in June. Despite the solid payroll gain, the unemployment rate edged higher to 4.9% as the participation rate […]

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June’s Consumer Confidence Research Notes

June 28, 2016

Consumer confidence improves more than expected in June The overall mood of U.S. consumers improved markedly in June, as economic data suggested that the economy accelerated after a soft opening to the year. The Conference Board Consumer Confidence Index rose to 98.0 in June, up from a revised 92.4 reading for the prior month and […]

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Jobless Claims (week of 6.18.16) Research Notes

June 28, 2016

Jobless claims decline more than expected; remain below 300,000 for 68th consecutive week Initial jobless claims fell by 18,000 to 259,000 for the week ended June 18, bringing the 4-week average down to 267,000. Generally, economists view claims below 300,000 as being indicative of a healthy labor market. This morning’s release marks the 68th consecutive […]

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Special Commentary

June 24, 2016

EXECUTIVE SUMMARY Voters in the UK took a historic step in voting to leave the Eurozone, marking the first time a member nation has exited the trade union. Global equity, bond, and currency markets all experienced volatility in the immediate aftermath of the vote. The S&P 500 opened roughly 3% below yesterday’s close, while UK, […]

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Special Commentary

June 23, 2016

EXECUTIVE SUMMARY After months of buildup, the United Kingdom (UK) now stands at the precipice of a critical referendum that will decide its future as a member of the European Union (EU). Recent polls indicate that voters are evenly split, with the outcome of the vote a virtual coin toss. From an economic perspective, the […]

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