Consumer Confidence and Future Expectations

The final print of the July UoM confidence index came in at 93.4, a touch above the estimate of 93.2 and the first look at 93.1 but is down from 95.1 in June and is at the lowest level since October. All of the decline was attributed to the Expectations component as it fell by 3.4 pts, only slightly offset by a .2 pt rise in Current Conditions. Encouragingly there was a 5 pt m/o/m increase in those expecting Higher Income and a 2 pt drop in those expecting Lower Income. The net figure of 30 is the highest since May 2000. Are we on the cusp of that long waited for acceleration in wages? The employment component moderated by 6 pts though. One year inflation expectations were left at 2.6%.

Spending decisions were mixed. Those that plan on buying a car/truck fell 4 pts while those that plan on buying a major household item was up by 2 pts. On housing, those that plan on buying a home was up by 3 pts to 146 (was 155 in April) while those that said it’s a good time to sell a house was up 1 pt to 144, just off a 12 yr high. I keep saying that evidence is building that buyers are backing off or pushing back from the current high home prices.

The question titled “Country will have continuous good times over the next 12 months” where one has 3 choices, 1) Good times, 2) Uncertain, 3) Bad times, was answered at a level of 111 which is up 1 pt m/o/m which compares with a post election high of 121 and vs the October print of 91. It peaked at 132 in this cycle in January 2015. It’s all time high was 165 in January 2000.

Bottom line, in contrast to the upside seen in the Conference Board measure of consumer confidence (today’s is more timely because it was taken within the past few days), this measure reflects a further cooling of the post election ebullience. That said, it never matters much to the market because it’s never predictive of future consumer behavior.