Low unemployment and gains in home and stock values drove personal financial evaluations to near all-time highs
Consumer confidence got a boost in August, according to new data from the University of Michigan.
The university’s Index of Consumer Sentiment was 96.8 during the month, up 3.6% from the 93.4 level in July and up 7.8% from 89.9 in August 2016. A measure of current economic conditions fell 2.2% to 110.9 during the month from 113.4 last month. The figure increased 3.6% from 107.0 in the year-ago period. The index of consumer expectations also increased from last month and last year. The August level was 87.7, up 8.9% from July and an increase of 11.4% from 78.7 in August 2016.
According to Richard Curtin, chief economist for the university’s Surveys on Consumer, consumer confidence remained favorable at the end of August despite a slight decrease from mid-month levels. Curtin said the favorable assessment by consumers of their own financial situations has primarily driven the stronger confidence in 2017. Personal financial evaluations are back near all-time highs given low unemployment, inflation, and interest rates, along with gains in home and stock portfolio values.
“When asked about news of recent developments, surprisingly few consumers made any reference to Charlottesville, North Korea, or Harvey – although too few interviews were conducted to fully assess the storm's ultimate impact. Harvey may diminish the third quarter pace of economic growth, and higher gas prices will directly impact consumers,” Curtin said.
Additionally, Curtin said the current level of consumer confidence is not likely to be affected by temporary increases in gas prices or some weakness in economic growth as consumers have become resilient. However, these factors may contribute to an increase in precautionary motives and may result in weaker spending, he said.
