KPI — August 2022: Consumer Trends

The Conference Board Consumer Confidence Index® decreased in July, following a significant decline in June. The Index now stands at 95.7 (1985=100), down 2.7 points from 98.4 in June. The Present Situation Index –based on consumers’ assessment of current business and labor market conditions – fell to 141.3 from 147.2 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – ticked down to 65.3 from 65.8.

“The decrease was driven primarily by a decline in the Present Situation Index – a sign growth has slowed at the start of Q3. The Expectations Index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist. Concerns about inflation – rising gas and food prices, in particular – continued to weigh on consumers,” says Lynn Franco, senior director of economic indicators at The Conference Board.

As the Fed raises interest rates to rein in inflation, she says purchasing intentions for cars, homes and major appliances all pulled back further in July.

“Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months,” Franco adds.

The chart evaluates the historical context for this index as a coincident indicator of the economy. Toward this end, Advisor Perspectives highlighted recessions and included GDP. To put the current report into larger historical context since its beginning in 1978, consumer sentiment is 35.6 percent below the average reading (arithmetic mean) and 34.8 percent below the geometric mean. The current index level is at the 0.7 percentile of the 536 monthly data points in this series. Note this indicator is somewhat volatile, with a three point absolute average monthly change. The latest data point saw a 3.6-point decrease from the previous month.

The Consumer Sentiment Index – a survey consisting of approximately 50 core questions covering consumers’ assessments of their personal financial situation, buying attitudes and overall economic conditions – increased slightly month-over-month to 55.1 from 51.5 but is down significantly year-over-year, according to the University of Michigan Survey of Consumers. Last month was the lowest reading on record, inclusive of consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status.

Important Takeaways from Survey of Consumers:

Consumer Income & Spending

According to the U.S. Bureau of Economic Analysis (BEA), personal income increased $133.5 billion (0.6%) at a monthly rate, while consumer spending increased $181.1 billion (1.1%) in June. The increase in personal income primarily reflected increases in compensation and proprietors’ income. The personal saving rate (personal saving as a percentage of disposable personal income) registered 5.1% in June, compared with 5.5% in May.

Important Takeaways, Courtesy of BEA:

According to the U.S. Census Bureau, advance estimates of U.S. retail and food services sales for July 2022 – adjusted for seasonal variation and holiday and trading-day differences but not for price changes – were $682.8 billion, virtually unchanged (±0.5%)* from the previous month, yet 10.3% (±0.7%) above July 2021. Total sales for the May 2022 through July 2022 period were up 9.2% (±0.5%) year-over-year. The May 2022 to June 2022 percent change was revised from up 1% (±0.5%) to up 0.8% (±0.2%). Retail trade sales were virtually unchanged (±0.4%)* from June 2022, but up 10.1% (±0.7%) year-over-year. Gasoline stations were up 39.9% (±1.6%) from July 2021, while non-store retailers were up 20.2% (±1.2%) from last year.

Key Performance Indicators Report — August 2022

Exit mobile version