If all Americans are concerned about is the here and now, then there is nothing to worry about when it comes to the U.S. economy. But when it comes to future economic conditions in the U.S., Americans haven’t been this depressed since the November 2016 presidential election. When it comes to future business conditions, the so-called “Trump Bump” is officially dead.
On the surface, data from The Conference Board appears to suggest consumer confidence is on the rise. In August, U.S. consumers’ confidence in their economy suddenly rose to the strongest level in five months.
The Conference Board announced that its Consumer Confidence Index advanced to a reading of 122.9 in August from a downwardly adjusted 120.0 in July. The July figure was originally reported at 121.1. Economists had forecast an August reading of 120.3.
August’s reading of 122.9 is the strongest since March, when the Consumer Confidence Index registered a reading of 124.9. March’s number was the highest since December 2000.
“Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence,” said Lynn Franco, Director of Economic Indicators at The Conference Board.
While August’s consumer confidence reading may be the second highest since December 2000, the future does not look so rosy. In fact, the percentage of consumers who expect business conditions to improve over the next six months tanked from 22.4% to 19.6%. That’s the lowest reading since the November 2016 presidential election.
That wasn’t the only black mark; employment expectations have also tumbled. The percentage of those expecting the U.S. to create more jobs declined from 18.5% to 17.1%. Those who anticipate fewer jobs dropped from 13.2% to 13%.
Interestingly, the media has crowed about how consumer confidence levels allegedly soared to a five-month high in August, going to 122.9 from120.0 in July. On a percentage basis, that represents a month-over-month in increase of 2.4%. At the same time, The Conference Board said consumers’ optimism about the short-term outlook was “relatively flat in August,” decreasing from 22.4% to 19.6%. That’s a drop of more than 12%.
It’s difficult to see how an increase in consumer confidence of 2.4% is something to celebrate while a decrease in the short-term outlook of 12% is relatively flat.
The strong consumer confidence numbers for August suggest that households are optimistic about their current economic conditions and future spending. The outlook for consumer optimism though is anything but positive which does not bode well for the U.S. economy as we enter 2018.
“The Conference Board Consumer Confidence Index Increased in August,” The Conference Board, August 29, 2017.