Two reports released Tuesday offered divergent views of the state of the economy. The Commerce Department announced that consumer spending remained weak in June, with increases in wages and wages being earmarked for savings. Meanwhile, the Conference Board announced that consumer confidence surprisingly rose in July after four consecutive declines.
Consumer spending was flat last month after declining 0.1 percent in May. Personal income, however, increased $61.8 billion, or 0.5 percent after increasing 0.3 percent in May. Wages, the largest component of personal income, increased by the same percentage after increasing 0.1 percent in May.
Personal saving, meanwhile, rose from 4 percent in May to 4.4 percent in June.
The economy great at an annual pace of 1.5 percent in the second quarter, a slowdown from the 2 percent growth in the January-March quarter. This was attributed to weak consumer spending. While this would indicate otherwise, the Conference Board report finds that Americans were more optimistic in July about the short-term outlook than they are about their current conditions.
The Conference Board Consumer Confidence Index, which had declined last month, improved slightly from 62.7 to 65.9. The Present Situation Index decreased in July from 46.5 to 46.2, but the Expectations Index improved from 73.4 to 79.1
Consumers offered mixed appraisals of current conditions. Those claiming business conditions are “good” declined to 13.8 percent from 14.2 percent, while those saying business conditions are “bad” decreased from 35.9 percent to 34.2 percent.
Regarding the labor market, those stating jobs are “hard to get” declined from 41.2 percent to 40.8 percent, while those claiming jobs are “plentiful” decreased from 8.3 percent to 7.8 percent.
The short-term outlook posted more upbeat readings. The percentage of consumers expecting business conditions to improve over the next six months rose from 16 percent to 18.9 percent, while those expecting them to worsen decreased from 15.8 percent to 14.8 percent. This optimism extended to the labor market, with those expecting more jobs in the months ahead increasing from 14.8 percent to 17.6 percent. Those forecasting fewer jobs edged down from 20.8 percent to 20.3 percent.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.