Confidence
Consumer confidence in August, according to the UoM, jumped 4.2 pts to 97.6 and that was well above the estimate of 94. It is at the best level since January but the components were mixed. Current conditions fell 2.4 pts to 111 which is the lowest level since November but was more than offset by the 8.5 pt jump in the Expectations component. Disappointingly, those expecting Higher Income fell 6 pts to a 4 month low and there was a 2 pt uptick in those expecting Lower Income. However, overall household finances did get better. Business expectations did improve m/o/m. To the question titled “Country will have continuous good times over the next 12 months” rose 12 pts. One year inflation expectations held at 2.6% for a 4th straight month.
Notwithstanding the big rise in Expectations, spending intentions were mixed. Those that plan to buy a home fell to the lowest level since August 2011. Those that said it’s a Good Time to Sell held just off the highest level since 2005. I’ll say again, home buyers are pushing back against these annual 5-6% price increases. We’ve reached the inflection point. Those that plan on buying a vehicle rose 2 pts but after falling by 4 pts last month. Those that plan on buying a major household item fell to the weakest point since October 2016.
Bottom line, the calls made to compile this survey happened in the early part of the week so doesn’t capture all the drama from yesterday. The UoM specifically said, “Too few interviews were conducted following Charlottesville to assess how much it will weaken consumer’s economic assessments.” This said, even with the rise in confidence before this, this data point is only anecdotal and never relevant in predicting future consumer behavior and thus never market moving.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.