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Consumer Confidence in the Economy reaches Second-Highest Level since 2008

The Conference Board Consumer Confidence Index has improved since May. The index stands at 83.0, which is up from 81.7 in April. This continued boost in U.S. consumer confidence is at the second-highest level since 2008.

According to Bloomberg, Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York stated that “Rising home prices certainly are making households feel better, and higher net wealth with rising equity portfolios, those things are helping households feel healthier.”

It would seem that, upon assessing current conditions, consumers have a more favorable outlook on the economy in regards to the short-term. They were also more positive about jobs and personal finances. According to Bloomberg, payrolls climbed by 288,000 workers in April; this is after seeing a 203,000 increase in the previous month.  Bloomberg also reported that the unemployment rate fell to 6.3 percent; this is a decrease from the 6.7 percent reported in March.

As far as business conditions, ACA International reported that “Consumers’ assessment of present-day conditions improved in May. Those stating business conditions are “good” decreased to 21.1 percent from 22.2 percent, while those stating business conditions are “bad” declined to 24.1 percent from 24.8 percent.”

An important key to understanding how consumers view the economy is to research their feelings concerning the labor market. In the report from May, consumers were positive about the outlook on the labor market. Those anticipating jobs becoming available in the next few months increased from 14.7 percent to 15.4 percent.

However, consumers revealed mixed feelings when it came to their income. The percentage of consumers expecting their incomes to increase has moved from 16.8 to 18.3, another positive increase in consumer confidence. However, those expecting a plunge in their incomes also increased from 12.9 to 14.5.

According to an article by Jeanna Smialek of Bloomberg, “Higher stock prices and home values are underpinning sentiment for some Americans. A broadening of the pickup in employment that leads to stronger wage gains would help to further boost sentiment and propel the consumer spending that accounts for almost 70 percent of the economy.”

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