Consumers are feeling more optimistic in August, as the Conference Board Consumer Confidence Index in August came in at 101.5, increasing sharply from last month’s revised reading of 91.0 and easily surpassing expectations for 93.1.
The survey was conducted earlier in the month, before the recent turmoil in global equity markets took center stage.
Those surveyed not only indicated a more upbeat mood about current economic conditions, but an increasingly rosy outlook for the future as well.
Recent reports on labor market conditions indicate that job creation remains robust, while layoffs remain near a multi-decade low. There is still room for improvement, as the jobless rate is still modestly elevated, wage growth remains lackluster, and some underutilization of the workforce still exists. Nonetheless, continued improvement in the jobs market has not been lost on consumers.
Confidence surged early this year as gas prices fell and growth was expected to accelerate after a soft start to the year, but had pulled back in recent months. While the August reading suggests that the collective mood has bounced back, various factors could dampen optimism in the coming months.
Should recent anxiety about a slowdown in global growth and the potential effects on the U.S. economy persist, sentiment should be expected to take a step back. Further volatility in capital markets could also put a temporary dent in portfolio values, which would also weigh on consumer mood.
Nonetheless, confidence remains in a constructive range and should remain elevated if those concerns prove to be temporary. Coupled with expanding payrolls and even moderate income growth, consumers should have both the fuel and the mindset to support continued household spending growth.