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First Cut: August Consumer Confidence Index shows faith in the labor market remains high

The Conference Board’s Consumer Confidence Index for August surprised to the upside with a reading of 135.1 after 135.8 in July. On the face of it consumers’ confidence wasn’t much changed month-to-month, but it is clear that faith in a sustained strong labor market has elevated current conditions (177.2 after 170.9) compared to worries about an economic slowdown in the near future (107.0 after 112.4).

Of the five index components, in the present consumers found business conditions were good in August (42.0% after 39.9%), and job were plentiful (51.2% after 45.6%). Expectations for good conditions six months from now were slightly softer for businesses (21.9% after 24.0%), for more jobs (19.7% after 19.9%), while improvement in incomes was expected to soften slightly (23.8% after 24.9%).

Altogether the data remain consistent with elevated confidence and solid prospects. However, there is a hint that consumers are feeling sensitive to the news cycle and negative reports about the economy could rub some of the gloss off the numbers in short order.

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