Consumer confidence has bounced back to its pre-pandemic level according to the nonprofit group the Conference Board’s economic indicator the Consumer Confidence Index.
The index grew to 129.1 this month from 128.9 last month, which is the highest level of confidence since February 2020. About 26% of consumers said that the current business conditions are good, an increase from 25% the month before, while 19% said that conditions are bad, which is also an increase from the prior month. About one-third of consumers predict that conditions will improve over the next six months, while about one-in-ten think conditions will worsen.
“Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start,” said Lynn Franco, senior director of economic indicators at the Conference Board. “Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve. Short-term inflation expectations eased slightly but remained elevated.”
Priscilla Thiagamoorthy, economist at Toronto’s BMO Capital Markets, told Reuters that “higher confidence suggests that consumer spending should support robust growth in the second half of this year.”
Pooja Sriram, economist at Barclays in New York, added that the “delta variant” of COVID-19 “does pose some downside risk, although we do not expect it to derail confidence entirely, given that its spread is uneven and largely concentrated in areas with low vaccination rates.”
Most consumers, 55%, said that there are plenty of jobs in the country, while about 10% said jobs are hard to come by. The index also shows that spending will likely rise as vaccination rates rise, the economy improves, and the upcoming implementation of President Joe Biden’s proposed spending package.
“Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles, and major appliances in the coming months,” added Franco. “Thus, consumer spending should continue to support robust economic growth in the second half of 2021.”
Ian Shepherdson, chief economist of Pantheon Macroeconomics, told MarketWatch that “These data also show no sign that people are much concerned by the upsurge in COVID cases, though that could easily change if the severe outbreaks in several southern states become more widespread.”
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