Surprising Jump in Consumer Confidence Leads Financial Updates

Published on: 09/14/18 9:13 AM

Category: Currency, Forex, Latest News, Market, Trade, Trading, US News, World News

 

Stronger than expected consumer confidence has boosted the US Dollar and stalled the downward economic trend.

According to the Conference Board’s US Consumer Confidence survey, August consumer confidence was 133.4 versus the 126.6 predicted figure. The August number represents a significant increase over July’s 127.9 reading. The 133.4 figure is the highest number since October 2000, reversing the recent decline in consumer confidence.



There were a variety of factors that led to the surprise increase. Expectations of business conditions over a period of the next six months demonstrated that 24.3 percent of respondents see “better” conditions. This number is up from the previous 22.9 percent. Also on the rise is the number of respondents expecting a jump in personal income levels. 25.5 percent of respondents are expecting a raise, up from 20.4 percent at the time of the last survey. This number correlates with recent reports demonstrating wage growth throughout the nation.

The changes

Because of the increased confidence in higher wages, it is not out of line to expect that people plan to purchase more appliances over the next six months. Large appliance purchase plans jumped from 47.8 percent to 53.1 percent. Therefore, the plans of the survey respondents to buy appliances over the next six months is understandable. In particular, plans to buy large appliances jumped to 53.1 percent from 47.8 percent. This last data point is most surprising since previous surveys had demonstrated that American consumers were concerned about the rising costs of goods due to the new tariffs on aluminum and steel. Inflation expectations are also trending downward. This month’s survey showed an expectation of a rate of 4.8 percent over the next year, while the experts had previously predicted 5.0 percent.

Strong consumer confidence

As expected when consumer confidence comes in strong, the gold index fell slightly from its weekly high of $1214. Meanwhile, the US Dollar continues its two-week slide. After posting a new yearly high in the middle of the month, the dollar has fallen below the bullish trend line. The biggest factor in this drop appears to be the recovery of the EUR/USD, pulling in strong numbers thanks to a positive close to the month. After a significant sell-off at the beginning of August, the second half of the month has seen prices erase the prior losses. Despite the rise of the EUR/USD, both the GBP/USD and AUD/USD are still exhibiting some bullish t