U.S. consumer confidence soared to an 18-year high in September. Households seem to be pretty confident about the labor market and robust economy in spite of escalating trade war tensions between the United States and China. This is welcome news for retailers, especially as the holiday season is about to kick-off.
The Consumer Confidence index increased to 138.4 from 134.7 in August per the Conference Board. “These historically high confidence levels should continue to support healthy consumer spending, and should be welcome news for retailers as they begin gearing up for the holiday season,” said Lynn Franco, the Conference Board's director of economic indicators.
This survey measures the sentiments with regard to present economic conditions and what is to follow in the next six months. It is near an all-time high of 144.7, reached in 2000.
It seems that the consumers are shrugging off trade tensions as the short-term outlook for businesses improved this month. Notably, 27.6% of consumers expect business conditions to improve over the next six months, up from 24.4% in August. People with a negative stance slashed the view from previous month's 9.9% to 8%.
The economy has expanded at a rate of 4.2% in the April-June quarter, higher than the previous estimate of 4.1%. The current employment rate of 3.9% is at nearly a two-decade low as the U.S. economy has been able to add jobs for 95 successive months, the longest stretch in record. Labor market expectations improved in September as 22.5% of consumers expect more job opportunities in the following months, up from 21.5% in the previous month.
“Knowing that the job market is strong, knowing that one has a regular paycheck does wonders for confidence,” said Jennifer Lee, senior economist at BMO Capital Markets.
An alternative measure of economic growth, Gross Domestic income (GDI) increased at 1.8% annualized rate in the second quarter. The average of GDP and GDI also referred to as Gross Domestic Output grew at a promising rate of 3% in the April-June quarter.
