Consumer Confidence Jumps Sharply

Boosted by an evermore favorable view of the jobs market, consumer confidence jumped sharply in July to a 135.7 level that easily surpasses Econoday's consensus range. July's result is the best of the year and puts the index back near its cyclical highs that were hit near the end of last year.

Jobs-hard-to-get is down sharply, 3.0 percentage points lower to 12.8 percent in a reading that is consistent with expectations for solid strength in Friday's July employment report. Another positive is a 2.2 percentage point rise in those who say jobs are plentiful, now at 46.2 percent.

In assessments on the 6-month outlook, consumers see improving business conditions and in the breakdowns for employment and income all the readings show increasing strength especially a 4.2 percentage point rise to a strong 24.7 percent for those who see their income rising.

One interesting point in the report is a drop in inflation expectations, down 4 tenths to 4.7 percent which for this particular reading is low. Though this follows an unusual 5 tenths jump in June that appeared to be tied to tariffs, July's decline fits in well with a Federal Reserve that wants to stimulate both demand and inflation with a rate cut. Yet the overall strength of the consumer, whether in confidence or spending which are both tied to the health of the jobs market, does not speak to the need for lower rates.