Consumer Confidence Soars to Annual High in July, Beating Forecasts

Consumer Confidence Index Hits 135.7, Up 11.4 Points

The Conference Board reported the Consumer Confidence Index soared 11.4 points in July and now stands at 135.7 (1985=100), up from 124.3 in June. That’s far stronger than the consensus forecast and the highest level for the index all year.

“After a sharp decline in June, driven by an escalation in trade and tariff tensions, Consumer Confidence rebounded in July to its highest level this year,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers are once again optimistic about current and prospective business and labor market conditions.”

“In addition, their expectations regarding their financial outlook also improved,” Franco added. “These high levels of confidence should continue to support robust spending in the near-term despite slower growth in GDP.”

Last week, the Bureau of Economic Analysis (BEA) “advance” estimate for second quarter (Q2) 2019 gross domestic product (GDP) came in at an annual rate of 2.1%, seasonally-adjusted (SAAR).

The stronger-than-expected estimate for Q2 — which is anticipated to be the weakest quarter of the year — was fueled by stronger-than-expected consumer spending gaining 4.3%.

Earlier Tuesday, BEA reported personal income rose $83.6 billion (0.4%) in June, beating the consensus forecast. Consumer spending as gauged by personal consumption expenditures (PCE) increased $41.0 billion, or 0.3% for the month after gaining solidly 0.4% in May and 0.6% in April.

Not surprisingly, consumers’ views of present-day conditions improved in July.

The percentage stating business conditions are “good” rose from 37.5% to 40.1%. Those saying business conditions are “bad” also increased, though marginally from 10.6% to 11.2%.

Consumers’ views of the job market were also more optimistic. Those saying jobs are “plentiful” gained from 44.0% to 46.2%, and those claiming jobs are “hard to get” fell from 15.8% to 12.8%.

The short-term outlook was more optimistic in July, as well. The percentage of consumers expecting business conditions will be better six months from now gained from 19.1% to 24.0%, while those expecting business conditions will worsen fell from 12.6% to 8.7%.

The labor market outlook also improved.

The percentage anticipating more jobs in the months ahead rose from 17.5% to 20.5%, while those anticipating fewer jobs fell from 13.9% to 11.5%. The percentage of consumers expecting an improvement in short-term income prospects rose from 20.5% to 24.7%, while those expecting a decline fell from 7.5% to 6.3%.

About Consumer Confidence Index

The monthly Consumer Confidence Survey is based on a probability-design random sample and is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was July 18.

The Conference Board publishes the Consumer Confidence Index at 10 a.m. ET on the last Tuesday of every month.