EconoFACTS

July 30, 2024 | 10:38

Sticking the Soft Landing

Economist

Jennifer Lee

Senior Economist and Managing Director
Economics

Jennifer has been wi... (Read more)

Jennifer Lee

Senior Economist and Managing Director
Economics

Jennifer has been wi... (Read more)

These are one of those times when one should look under the hood, read between the lines, look beneath the surface, take a few extra moments.... well, you get the idea... before interpreting a data release....

At first glance, the initial reaction was "What? U.S. consumer confidence rose?" and "What? Job openings are still over 8 million?" Intriguing, indeed. But revisions paint a different picture for these releases.

1) Consumer confidence rose. According to the Conference Board, the headline index climbed 2.5 pts in July to 100.3, which was unexpected. However, the increase was not enough to erase June's downwardly revised result, and only leaves the index at a 2-month high. All of the hope was placed on the future... expectations grew 5.4 pts to a 6-month high of 78.2, while the present situation lost ground for the second straight month, sliding 1.7 pts to a 3-year low of 133.6.

But what was perhaps more interesting was the view on jobs, which is not looking as promising as it once did. The percentage of respondents saying that jobs were plentiful still outnumbered those that say that jobs were harder to get, but the difference is narrowing. In fact, the share of those saying it was tougher to land a gig these days rose to 16%, the highest since March 2021. This narrowed the labor differential to a 3½-year low. Hmmm..... could see some upward pressure on that (for now) 4.1% jobless rate.

2) Job openings didn't fall as much as expected. For the 3rd time in the past 4 months, there were fewer job openings out there; but thanks to an upward revision to May (which saw 311k more openings, 100k more than the first release), there were only 46k fewer openings in June (or 8,184k). That's still 1.2 jobs for every unemployed person. But... all of the reductions were in the private sector. And, they were broad..... manufacturing, financial activities, even education and health care. Leisure & hospitality had more openings, though. Note that, perhaps on concerns about the labor market, fewer people quit ... and fewer people were hired. Yes, the response rate for this survey isn't great but it does support the Conference Board's report.

Bottom Line: Potentially slower consumer spending and weaker job growth ... both keep the door open for a September rate cut.

Table 1 - United States — Consumer Confidence Index

(1985 = 100)

Source: BMO Economics, Haver Analytics