U.S. Consumer Confidence Holds Steady in July
New York, NY — U.S. consumer confidence held steady in July, despite the fallout from the United Kingdom’s referendum to leave the European Union.
The Conference Board’s consumer confidence index came in at 97.3 in July, a slight decrease from June’s downwardly revised 97.4. (Source: “The Conference Board Consumer Confidence Index Virtually Unchanged in July,” The Conference Board, July 26, 2016.)
The number turned out to be a nice surprise, as economists were anticipating a 95.6 reading from the index.
The index is a measure of consumers’ optimism on the state of the economy. It is based on consumers’ perceptions of current business and job market conditions, as well as their expectations for business, employment, and income for the next six months.
In July, consumers’ assessment of current conditions slightly improved. Those indicating business conditions are “good” rose from 26.8% to 28.1%. However, those stating business conditions are “bad” also increased, from 18.3% to 19.0%. Consumers’ assessment of the labor market did not change much from the previous month.
As for outlook, consumers were slightly less optimistic about business conditions over the next six months. The share of consumers expecting business conditions to improve in the short term declined from 16.6% to 15.9%. The percentage of consumers expecting higher incomes also decreased, from 18.2% to 16.6%.
“Consumer confidence held steady in July, after improving in June,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers were slightly more positive about current business and labor market conditions, suggesting the economy will continue to expand at a moderate pace. Expectations regarding business and labor market conditions, as well as personal income prospects, declined slightly as consumers remain cautiously optimistic about growth in the near-term.” (Source: Ibid.)
Note that a major event happened before the previous report. The U.K. voted to leave the European Union, which caused major disruptions in financial markets around the world. But based on The Conference Board’s results, the event did not have much impact on U.S. consumer confidence.
The reading from The Conference Board contrasts with the preliminary results from the University of Michigan’s index of consumer sentiment. Earlier this month, the University of Michigan said that its monthly index of consumer sentiment fell 4.3% sequentially to 89.5% in July, the second-lowest level of the year. In the survey, concerns about prospects of the national economy due to the Brexit vote mainly came from high-income households. (Source: “Preliminary Results for July 2016,” University of Michigan, July 15, 2016.)