US consumer confidence jumps in July, price expectations dip
By Alexander Bueso
Date: Tuesday 25 Jul 2023
(Sharecast News) - Consumer confidence in the U.S. jumped in July, breaking out of the sideways range that had been seen throughout much of the past year, the results of a survey showed.
The Conference Board's consumer confidence index increased from a reading of 110.1 for June to 117.0 in July.
Economists had penciled in a reading of 112.0.
In particular, the business lobby group highlighted the improvement in the expectations sub-index, which rose from 80.0 to 88.3. A sub-index tracking the present situation also rose, albeit by less, from 155.3 to 160.0.
"Importantly, Expectations climbed well above 80-the level that historically signals a recession within the next year," the Conference Board said.
"Despite rising interest rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market. Although consumers are less convinced of a recession ahead, we still anticipate one likely before year-end."
For her part, Conference Board chief economist, Dana Peterson, noted how confidence strengthened across all age groups, as well as among consumers with incomes below $50,000 and those making over $100,000.
Meanwhile, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he was skeptical that rising confidence in the outlook - or expectations - signalled an impending reacceleration in consumption.
To back up his arguments, he noted how consumer surveys were apparently increasingly politicised in recent years, leading to a "patchier" relationship vis-a-vis spending.
And in the case of a rival survey conducted by the University of Michigan, it was apparent that Democrats were largely responsible for the recent surge.
Shepherdson also noted the one tenth of a percentage point dip in the Conference Board's index for inflation expectations one-year ahead to 5.7%.
A sustained drop in inflation expectations five-to-10 years was also likely to emerge soon, he anticipated.
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