Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Consumer confidence improved in August, yet confidence remains within a narrow range and well below pre-pandemic levels. Views on the labor market remain depressed, holding back overall optimism.
Improving Views, but Some Hesitation
Consumers grew more confident in August. The Consumer Confidence Index rose to 103.3, notching the highest level in six months, and July’s data was revised slightly higher (chart). Household views on current conditions as well as expectations around the future improved, though as seen in the nearby chart both remain well-off pre-pandemic levels. Despite the more recent improvement, overall confidence has moved within a narrow range so far this year.
There is some divergence under the surface and the accompanying release noted a drop in confidence for those earning less than $25K versus higher-income households, those making over $100K, still the most confident income group. This is consistent with other data that suggest lower-income and younger households are growing more vulnerable.
There is no shortage of factors influencing households today. Clarity around the Democratic Presidential nominee could be boosting sentiment, as could prospects for Fed easing in September. Yet, still-high prices and a moderating labor market continue to spook households.