August 29, 2023 | 11:04
A JOLT to U.S. Household Confidence
The Conference Board’s consumer confidence index fell more than expected, down 7.9 pts to 106.1 in August, after the prior month was revised lower. Views about the 'present situation' wilted 8.2 pts to 144.8, the lowest level since last November. Meantime, ‘expectations’ about the future dropped 7.8 pts to 80.2. And, the inflation outlook over the next 12 months ticked up to 5.8%, marking the first increase in five months, thanks to rising gas prices and still-elevated food costs.
On the employment front, 40.3% of respondents agreed that “jobs remain plentiful”. That’s down from 43.7% in the prior month and is the lowest since April 2021. Meanwhile, the share who found “jobs hard to get” climbed 2.8 ppts to 14.1%, the highest since… April 2021. On net, the labour differential fell to 26.2% from 32.4% in the prior month, suggesting softening labour market conditions. A separate report showed job openings fell to 8.83 mln in July, marking the lowest level since March 2021. This is what the Fed wants to see—easing labour demand. Vacancies have continued to trend down and are well below the record-high 12 mln hit back in March 2022. Meantime, hiring softened to the lowest level since the start of 2021. And, the quits rate is now lower than its pre-pandemic peak.
The Conference Board highlighted that buying plans fell for big-ticket items such as homes amid poor affordability. Earlier this morning, the S&P CoreLogic Case-Shiller report showed home prices for the country's 20 largest cities climbed 0.9% in June, the fourth straight monthly gain. Despite mortgage rates that are above 7%, home values have held up better-than-expected on a lack of supply.
Bottom Line: U.S. consumer confidence fell more than expected in August amid still elevated food and gas prices, softening labour market conditions and greater economic uncertainty.