Washington: In August, Americans’ optimism grew slightly about the economy, despite lingering concerns about the labor market. The Conference Board’s consumer confidence index rose to 103.3, up from a revised 101.9 in July, with improvements in both current conditions and future expectations.
Dana Peterson, Chief Economist at the Conference Board, explained, “Consumers had mixed feelings in August. They felt better about business conditions but were more worried about the job market.” She noted that while people still viewed the current labor situation positively, they were less hopeful about future job opportunities, likely due to recent unemployment increases. Expectations for future income also saw a slight decline.
This report comes at a crucial time, with the Federal Reserve planning to lower interest rates next month. It also coincides with the 2024 presidential campaign, where both Vice President Kamala Harris and former President Donald Trump are focusing on the economy in their messages.
Consumer confidence varied by age and income. Confidence decreased among those under 35 but increased for people aged 35 and older. Higher-income earners, especially those making over $100K, remained the most confident. However, those earning less than $25K experienced a drop in confidence.
Inflation expectations slightly decreased, with consumers predicting a 4.9% rise in prices over the next year, still above the current 2.9% inflation rate. Interestingly, political differences didn’t seem to affect economic expectations much, as responses about the impact of the upcoming 2024 elections on the economy stayed stable compared to 2020.
Gregory Daco, Chief Economist at EY, pointed out that recent stock market fluctuations haven’t significantly changed consumer behavior. The Dow Jones Industrial Average even reached a new high. Daco added that the Federal Reserve’s upcoming policy easing should support economic growth, predicting a 2.5% GDP growth for 2024, slowing to 1.7% in 2025.
In the housing market, the S&P CoreLogic Case-Shiller national home price index hit a new peak in June, with a 5.4% annual increase, though this was slightly lower than the 5.9% rise seen in the previous month. New York led with a 9% year-over-year gain, followed by San Diego and Las Vegas.
Danielle Hale, Chief Economist at Realtor, expects the growth rate of home prices to slow down further, projecting a 4.6% increase for 2024. Despite lower demand, the market remains balanced due to a limited number of homes for sale, with more sellers making price cuts.
This mix of optimism and caution reflects how Americans are navigating the current economic landscape, balancing hopes for growth with concerns about job security and inflation.
POLITICS | Kamala Harris sets record with $540mn post DNC fundraising
