Is U.S. Consumer Confidence Up or Down? Probably a Bit of Both
(Bloomberg) -- Are American consumers turning more upbeat, or less? It depends on which poll they’re responding to.
Consumer confidence unexpectedly rose in August to the highest level since October 2000, according to a report Tuesday from the New York-based Conference Board, exceeding all forecasts in a Bloomberg survey of economists. Contrast that with the University of Michigan’s preliminary report released Aug. 17, which showed household sentiment fell this month to the lowest level in almost a year -- missing all analyst estimates.
While improved assessments of the economy and the outlook lifted the Conference Board measure -- highlighting labor market strength -- the pullback in the Michigan gauge in part reflected persistent concerns about trade tensions’ negative fallout on the economy.
Even more notable was the divergence in consumers’ attitudes toward purchasing big-ticket items. A greater share of respondents in the Conference Board survey anticipate purchasing homes, cars and major appliances within six months. Meanwhile, the Michigan report showed vehicle-buying views were the least favorable since 2013, home-buying conditions were seen less favorably than any time in about it decade, and buying conditions for large household durable goods fell to the lowest level in almost four years.
The mixed results warrant some caution in gauging what this means for growth in household spending, the biggest part of the economy. One safe bet: watch what consumers do, not what they say.
The surveys are sensitive to different variables, with the Conference Board focusing more on the job market, while the Michigan survey better reflects views on fuel costs and stocks, said Ryan Sweet, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.
“The truth about consumers is somewhere in between” the results of the two surveys, Sweet said. “The relationship between confidence and spending is quite loose,” though “right now the consumer has plenty of tailwinds.”
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