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Consumer economic optimism hovers at 16-year high

Overall confidence increases in August

Americans’ confidence in the present state of the economy increased in August, and remains near its 16-year high, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.

The index increased to 122.9 in August, up from 120 in July. The increase in the Present Situation Index was even higher as it rose from 145.4 to 151.2, and the Expectations Index increased to 103, up from 104 in July.

In 1985, the index was set to 100, representing the index's benchmark. This value is adjusted monthly based on results of a household survey of consumers' opinions on current conditions and future economic expectations. Opinions on current conditions make up 40% of the index, while expectations of future conditions make up 60%.

“Consumer confidence increased in August following a moderate improvement in July,” said Lynn Franco, The Conference Board director of economic indicators. “Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence, with the Present Situation Index continuing to hover at a 16-year high, July 2001 – 151.3.”

“Consumers’ short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate an acceleration in the pace of economic activity in the months ahead,” Franco said.

Consumers’ view of current conditions continued to improve in August as those who said business conditions are good increased from 32.5% to 34.5% and those who said conditions are bad decreased slightly from 13.5% to 13.1%.

Americans also held a more positive outlook on the labor market. Those who stated jobs are plentiful increased from 33.2% to 35.4%, while those who answered jobs are hard to get decreased to 17.3%, down from last month’s 18.7%.

Consumer optimism in the short-term outlook remained flat in August as the percent of Americans who expect business conditions to improve over the next six months decreased slightly from 22.4% to 19.6%. However, this was offset by those expecting business conditions to worsen, which also decreased from 8.4% to 7.3% in August.

The outlook on the labor market also showed mixed results. The portion of those expecting more jobs in the months ahead dropped from 18.5% to 17.1% in August, but those who expect few jobs also decreased slightly from 13.2% to 13%. The percentage of Americans who expect an improvement in their pay increased slightly from 20% to 20.9% as those expecting their pay to decline decreased from 9.5% to 7.8%.

Other measures of consumer confidence also increased in August, though they are not above their 16-year high. The Survey of Consumers conducted by the University of Michigan showed consumer sentiment increased to its highest level since January.

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