American consumer confidence took off in July on the back of record equity values, lower borrowing costs and apparently solid job growth. The Conference Board's sentiment measure spiked to 135.7 from 124.3, more than retracing June's decline. Households were more upbeat about their current and future situations, as well as job prospects. The net jobs plentiful/hard-to-get measure almost fully reversed higher after plunging in June. This flags a possibly lower jobless rate in July, due on Friday. Households plan to buy more cars, homes and appliances than in June. Elevated confidence will provide a brisk tailwind on consumers' backs, likely keeping spending around a 2% rate in the second half of the year.

In another report, pending home sales rose much more than expected in June, up 2.8% after a 1.1% advance in May. Sales have now reversed the big sag that set in at the turn of the year. The dramatic plunge in mortgage rates and sky-high confidence might be giving the housing market a renewed lease on life, but the peak most likely was reached last year.

Yep, the Fed will still lower rates tomorrow...but further moves are more in doubt if the economy shows some pep.

Table 1 - United States — Consumer Confidence Index

(1985 = 100)

Source: BMO Economics, Haver Analytics

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