Unexpectedly, consumer confidence in the United States witnessed a decline during the month of August, reversing its prior upward trajectory, as citizens grappled with the surging costs of gasoline and groceries. The most recent survey data, released on Tuesday, shed light on this shift.
The relentless surge in prices has been a focal point for the US Federal Reserve, which has undertaken an assertive campaign of interest rate hikes to combat this issue. While these measures have yielded some success in curbing inflation, they have simultaneously pushed up the cost of borrowing across a spectrum that encompasses car loans and mortgages.
In August, consumer confidence retreated significantly to a mark of 106.1, marking a downward trajectory from the revised figure of 114.0 noted in July. The statement from the Conference Board relayed this information, highlighting that economists' predictions, as surveyed by MarketWatch, had anticipated a median figure of 116.0. Notably, this reading represents the lowest point since May of the present year.
Dana Peterson, the chief economist at The Conference Board, pointed out, "August's disappointing headline number reflected dips in both the current conditions and expectations indexes." Peterson went on to note that the primary concern for consumers lay in the general rise in prices, with a particular emphasis on the escalating costs of groceries and gasoline.
The impact of this trend was most acutely felt among two specific demographic groups: individuals with household incomes exceeding $100,000, and those earning less than $50,000. Insights from the Conference Board revealed these disparities.
"While job growth continues its robust trend, inflation exhibits a gradual decline, and real disposable incomes show improvement—a positive scenario for households," remarked Rubeela Farooqi, the chief US economist at High Frequency Economics, in a note addressed to clients on Tuesday. However, Farooqi also drew attention to a notable decline in household perceptions of labor market conditions during the month of August. She pointed out that this factor could potentially serve as a headwind against consumer spending.
