According to the US Conference Board, American consumers were more confident in August. Consumer confidence increased to 103.3, comfortably north of the market’s median estimate of 100.7 (per a Reuters survey) and July’s upwardly revised reading of 101.9. For those new to this report, the Consumer Confidence Index assesses current and future economic conditions.

Topline Numbers Higher in August

Along with consumer confidence increasing to 103.3, the present situation index shows that consumers’ views of current conditions rose to 134.4 in August from 133.1 in July. Additionally, US consumers’ short-term expectations for income, business, and labour market conditions also rose to 82.5 in August, up from July’s upwardly revised reading of 81.1. According to the report, this print marked the second consecutive month above 80; of relevance, readings south of the 80 value can signal a recession.

Despite the higher-than-expected release, the US Dollar Index and US Treasury yields failed to find acceptance at higher levels and moderately navigated lower. This was likely due to appraisals of the labour market deteriorating in August. The report highlighted that there were fewer jobs, and they were slightly harder to find.

Additionally, the S&P 500 is +0.2% in the green. At the same time, Fed rate pricing remains unchanged: investors are still expecting over 100 basis points of easing this year (four rate cuts with the possibility of a 50 basis point reduction at September’s meeting).

Consumers Expressed Mixed Feelings In August

In spite of the report’s headline values showing a moderate improvement in August, Dana Peterson, Chief Economist at The Conference Board, said: ‘Consumers continued to express mixed feelings in August’. Peterson added: ‘Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labour market. Consumers’ assessments of the current labour situation, while still positive, continued to weaken, and assessments of the labour market going forward were more pessimistic. This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income’.

Regarding write-in responses, the report made more mentions of stock prices and, understandably, unemployment. Despite ‘average 12-month inflation expectations’ falling to 4.9% in August, marking the lowest level since early 2020, write-in responses were also still heavily focused on inflation. That said, consumers’ views of a potential recession remained unchanged.

The latest Consumer Price Index revealed US headline inflation moderately eased in July, slowing to +2.9% from +3.0% in June. Alongside this, July’s Employment Situation Report saw job growth cool to 114,000 new payrolls, down from a revised 179,000 in June, with unemployment driving higher to 4.3%, its highest rate since October 2021.

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