Conference Board Consumer Confidence Slides In August As Inflation Fears Reignite

The Conference Board Consumer Confidence Index fell by 1.3 points in August to 97.4 (versus 96.5 expectations and from an upwardly revised 98.7 in July).

• The Present Situation Index - based on consumers’ assessment of current business and labor market conditions - fell 1.6 points to 131.2 (from an upwardly revised 132.8).

• The Expectations Index - based on consumers’ short-term outlook for income, business, and labor market conditions - fell 1.2 points to 74.8 (from an upwardly revised 76.0).

Source: Bloomberg

How do you revise consumer confidence data?

“Consumer confidence dipped slightly in August but remained at a level similar to those of the past three months,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.

“The present situation and the expectation components both weakened. Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month, but stronger views of current business conditions mitigated the retreat in the Present Situation Index.’

“Meanwhile,” Guichard points out that “pessimism about future job availability inched up and optimism about future income faded slightly. However, these were partly offset by stronger expectations for future business conditions.”

Source: Bloomberg

Consumers’ write-in responses showed that references to tariffs increased somewhat and continued to be associated with concerns about higher prices. Meanwhile, references to high prices and inflation, including food and groceries, rose again in August.

Consumers’ average 12-month inflation expectations picked up after three consecutive months of easing and reached 6.2% in August – up from 5.7% in July but still below the April peak of 7.0%…

Source: Bloomberg

Finally, August saw consumers’ outlook on stock prices deteriorate slightly, with 47.4% of consumers expecting stock prices to increase over the next 12 months, down from 48.9% in July.

Conversely, 30.3% of consumers expected stock prices to decrease over the next 12 months, up from 28.1% in July.

The share of consumers expecting interest rates to rise increased to 54.0% from 53.1% in July and fewer consumers expected interest rates to fall (20.9% vs 21.4% in July).

Source: Bloomberg

Among demographic groups, confidence fell for consumers under 35 years old, was stable for consumers aged 35 to 55, and rose for consumers over 55.

The evolution of confidence by income groups was mixed, with no clear pattern emerging.

By partisan affiliation, confidence weakened in August among both Republicans and Democrats but was little changed for Independents.