Consumer confidence increased in August. The Conference Board's Consumer Confidence Index was 81.3, up 4.3 points from the revised 77.0 in July. This was above economists' expectations of 80.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was mixed across both portions of the Conference Board index. The Present Conditions index decreased to 61.6 in August from 63.0 in July. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index rebounded from a sudden drop last month. This measure of future economic activity was 94.4, up 8.1 points from July.
The University of Michigan's Consumer Sentiment Index, a comparable index, decreased slightly in August to 89.3 from 90.9 in June. Both component indices also fell. The Present Conditions index dropped 2.4 points to 99.7 in August, while the Expectations portion fell to 82.5 from 83.7 in July.
Improved expectations boosted the Conference Board index in August. Optimistic spending plans reported in the survey are a hopeful sign that consumer spending will remain steady. Recent child tax credits that households received as part of the economic stimulus package could boost consumer spending. Indirect factors, such as stock market gains and rising business investment, should also positively affect consumer confidence.
Despite August's increase, however, consumer confidence is below levels of last year. Consumers are concerned with falling employment and high debt levels, as well as slowing wage growth. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched economic indicator. Confidence levels are expected to fluctuate until consumers feel more certain about sustained economic recovery.
Sources: www.conference-board.com
www.economy.com
