Friends Carrie Nasi left, Tracey, Cindy Colema and Lori Stayberg, met for food and drinks at Jonesy’s Local Bar on the first day of the bar reopening in Hudson. Bars, restaurants and everything else is reopening in Wisconsin after the state Supreme Court struck down the state’s stay-at-home order Thursday May 14, 2020 in Hudson, Wisconsin. Star Tribune via Getty Images
- The Conference Board’s Consumer Confidence Index surged to 101.8 in August from 86.3 as Americans turned more hopeful toward the US economic recovery.
- The increase is the biggest one-month jump in 17 years and follows back-to-back declines through the summer.
- The index of present situations jumped to 98.5 from 85.8. The non-profit’s Expectations Index — which tracks consumers’ short-term outlook for the labor market, income, and business activity — rose to 104 from 86.6.
- Still, the main gauge remains well below its pre-pandemic high. The lack of near-term stimulus could drag on Americans’ cashflow and drive a decline in confidence as early as October, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note.
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Consumer confidence spiked higher through August as Americans’ expectations for economic recovery significantly improved.
The Conference Board’s Consumer Confidence Index jumped to 101.8 from 86.3, marking the biggest one-month jump in 17 years. Economists expected the gauge to only modestly increase to 90 last month. The increase also follows back-to-back monthly declines linked to the summer’s jump in COVID cases.
“A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.
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August’s climb places the index just below its May level. To be sure, the index remains well below its pre-pandemic high of roughly 110.
The Conference Board’s index of present situations jumped to 98.5 from 85.8 last month. The non-profit’s Expectations Index — which tracks consumers’ short-term outlook for the labor market, income, and business activity — rose to 104 from 86.6.
The sharp increases are likely tied to the stock market’s surge to record highs through August, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. The tumbling unemployment rate also lifted sentiments, he added, but those drivers faded into the fall and will likely prevent the rally from lasting.
“Given the performance of stocks in recent weeks, and the loss of momentum apparent in the near-real-time labor market data, we expect confidence to dip in October,” Shepherdson said.
The lack of a near-term stimulus deal will also weigh on optimism heading into election season, the economist added. Cashflow and the pace of economic reopening are key drivers to sentiment gauges, and both have slowed as stimulus programs expire.
Some lawmakers are holding out hope for a last-minute deal. House Democrats revealed a $2.2 trillion spending proposal Monday afternoon that includes another round of relief payments, expanded unemployment benefits, and assistance for airlines. Though the measure still comes in above Republicans’ spending target, it marks a step closer to compromise.
Separately, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke over the phone regarding new relief funds on Tuesday. The two indicated their conversations will continue throughout the week.