Saturday, July 20, 2024

US consumer confidence jumps to highest level since early 2022

by BIZ Magazine

WASHINGTON (AP) — The American consumer’s confidence jumped in June to its highest level in 18 months as a strong labor market continues to buoy the U.S. economy.

The Conference Board reported Tuesday that its consumer confidence index rose to 109.7 in June from 102.5 in May. That’s the highest the reading has been since January of 2022 and much higher than economists had forecast.

The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — rose to 155.3 from 148.9 in May.

The board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — climbed to 79.3 this month from 71.5 in May.

A reading under 80 often signals a recession in the coming year. The Conference Board noted that reading has come in below 80 every month but one since February of 2022.

The board said that consumers’ fears of a recession declined in June, with 69.3% of respondents saying a recession is somewhat or very likely in the next 12 months, down from 73.2% in May.

Consumer spending, which makes up about 70% of U.S. economic activity, has held up well despite the Federal Reserve raising interest rates in its effort to cool the economy and bring down persistent, four-decade high inflation. At its last meeting, the Fed elected not to increase its benchmark borrowing rate after raising it 10 straight times over 15 months.

Last month, the government reported that consumer spending jumped 0.8% from March to April, the biggest increase since January. Much of the increase was driven by spending on new cars, which soared 6.2%. The latest consumer spending report, which includes an important measure of inflation that the Fed monitors closely, comes out Friday.

Consumer prices in the U.S. rose again in April, and measures of underlying inflation stayed high. However, the latest data did provide some evidence of cooling inflation, particularly at the grocery store.

Regarding the job market, 46.8% of respondents said that jobs were plentiful, up from 43.3% in May.

The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of enduring strength in an economy that the Federal Reserve is desperately trying to cool.

Economists surveyed by FactSet expected that consumer confidence rose much more modestly in June from May, to 103.9.

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