Consumer Confidence – Expectations Improve
The consumer surveys are quite volatile and divergent. The University of Michigan survey had its current conditions index fall 5.8% month over month. The latest Conference Board survey, which was released on Tuesday, was the best report since October 2000.
Supporting the Conference Board survey are the retail sales reports seen in the chart below. Supporting the University of Michigan survey, real wage growth has gone negative as inflation has perked up.
Studying these stats is clearly partially an art as there are always divergent points worth considering. The newest one this year was the wholesale change in the savings rate as it was moved much higher. This signals that the consumer isn’t overstretched like we thought.
It’s particularly remarkable to review these two surveys. The Michigan report led with the point that buying conditions for housing were the lowest since 2008. And, buying conditions for cars were the lowest in 4 years.
Consumer Confidence – Retail earnings from the top stores and overall retail sales didn’t jive with this weakness.
However, there has been some weakness in housing which should be taken seriously.
Specifically, the Conference Board index hit 133.4 which beat the high end of the consensus range which was 128.0. The average estimate was 126.8. The July report was revised up from 127.4 to 127.9.
Consumers are as confident now as during the height of the dot-com bubble. That’s impressive, especially considering the fact that the stock market is on a sustainable path. Also, there aren’t many risks to a collapse in markets like how the last two cycles ended.
Both parts of the Conference Board index were different than the Michigan survey. The Michigan survey’s final result for August will be released on Friday. It’s possible it gets revised much higher.
The Conference Board survey had the Present Situation index improve from 166.1 to 172.2 and the expectations index increase from 102.4 to 107.6. As you can see, this survey is similar to the Michigan one in that they both have the present doing better than the future.
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