EconoFACTS

August 27, 2019 | 10:27

U.S. Conference Board Consumer Confidence (August 2019) — What Trade War?

Economist

Director and Senior Economist
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

Sal Guatieri

Director and Senior Economist
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

American households largely shrugged off the August 1 escalation in trade tensions between the U.S. and China and resulting equity turbulence to stay upbeat about their current situation, especially about job prospects. This is critical to keeping the U.S. expansion moving forward at a near potential pace in the face of waning business investment and weaker exports.

The Conference Board's consumer confidence index stepped back only slightly in August (and much less than feared) to 135.1 from an upwardly revised 135.8 in July. It remains close to the cycle high reached last October. Households were super confident in their present situation, notably the ability to find a job. A surge in the jobs plentiful index to a cycle high lifted the net job prospects measure (plentiful less hard to get) by more than 6 points to 39.4...this could signal a drop in the unemployment rate in August. So, despite growing worries, businesses don't appear to be cutting staff or even slowing the pace of hiring all that much.

More households intend to buy a car, though somewhat fewer report intentions to purchase a home or appliances. All three trends are holding fairly steady with no evident downshift.

Overall, this is a positive report that suggests the economy's big engine is continuing to motor. The Fed will still cut rates in a few weeks, but a sense that consumers remain largely shielded from the trade war implies a 25 point, rather than 50 point, chop.

Table 1 - United States — Consumer Confidence Index

(1985 = 100)

Source: BMO Economics, Haver Analytics