Consumer Confidence Index Rises Above Expectations

Enormous improvement in the assessment of the current labor market drove the consumer confidence index well beyond expectations, to 101.5 in August for a more than 10 point surge from July. A rare 6.5 percentage point drop to 21.9 percent in those describing jobs as currently hard to get points to outsized gains for the August employment report. This reading will have forecasters scratching their heads. The gain for this reading lifts the present situation component to 115.1 for a more than 11 point increase from July that points to consumer power for August.

The expectations component also shows major strength, up more than 10 points to 92.5. Here the gain reflects improving expectations for the employment outlook were optimists are back out in front of pessimists. The outlook for income also remains positive.

Buying plans, however, are downbeat with fewer planning to buy a vehicle and, in what could be an ominous indication for housing, many fewer planning to buy a house. Inflation expectations are dormant, down 2 tenths to only 4.9 percent which is very low for this reading.

The Yellen Fed has put great emphasis on the importance on consumer confidence readings and this report points to job-driven strength ahead for household spending.

Recent History Of This Indicator:
Consumer confidence is expected to bounce back to 94.0 in August following July's nearly 10 point plunge to 90.9. The sample timing of this report typically goes out to mid-month which is likely to exclude the bulk of the global market turmoil centered in China. But buying plans will offer their own clues on housing demand and whether auto demand will remain strong.