What was behind June’s jump and July’s slump in Consumer Confidence, and what does it mean for the economic recovery overall?
What is the Consumer Confidence report? Consumer Confidence measures the level of confidence individual households have in the economy, and tracks future planned spending and the business cycle. This helps ascertain how optimistic or pessimistic consumers will be in the near future.
What’s happened recently? In June, the improving job markets caused the reading to surge to 101.4, well above the May reading of 94.6, and much better than expected. Index changes of at least five points are considered significant. However, in July Consumer Confidence fell to 90.9. Consumers were less optimistic for the outlook in the labor markets as uncertainty and volatility in the financial markets continued, prompted by the situations in Greece and China.
What’s the bottom line? The more confidence people have about the economy and personal finances, the more likely they are to increase their spending on goods and services. They are also more likely to consider a major purchase like a home or car. Increases in consumer spending could be a catalyst for further economic growth, and help the economy fire on all cylinders.
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