American consumers feeling more confident in July
AMERICAN consumers felt more confident in July as expectations over the near-term future rebounded, according to an AP report. However in a reversal of recent trends, feelings about current conditions weakened.
AP reports The Conference Board, a business research group, said Tuesday that its consumer confidence index rose to 100.3 in July from a downwardly revised 97.8 in June.
The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months. The measure of Americans’ short-term expectations for income, business, and the job market rose in July to 78.2 from 72.8 in June. A reading under 80 can signal a potential recession in the near future.
AP, however, pointed to consumers’ view of current conditions dipping in July to 133.6, from 135.3 in June.
Elevated prices for food and groceries remain the main driver of consumers’ view of the US economy. Though inflation has come down considerably since the Federal Reserve started boosting interest rates in March of 2022, price increases remain well above pre-pandemic levels.
“Even though consumers remain relatively positive about the labour market, they still appear to be concerned about elevated prices and interest rates and uncertainty about the future — things that may not improve until next year,” said Dana Peterson, The Conference Board’s chief economist, as quoted by AP.
The number of respondents who said they planned to purchase a home fell to a 12-year low as elevated interest rates, sky-high home prices, and a lack of supply continue to discourage home shoppers.
The number of consumers predicting a recession inched up this month but is still well off its 2023 peak, the board said. Consumer spending accounts for nearly 70 per cent of US economic activity and is closely watched by economists for signs of how the American consumer is feeling.
The Fed wraps up its current two-day meeting on Wednesday but most analysts expect no change to interest rates. Most are forecasting the first rate cut in more than four years to come at its next meeting in September.
