Consumer confidence in U.S. declines by most since October

Income Expectations

The proportion who said they expected their incomes to decrease over the next six months rose to a 10-month high of 16.8 percent from 14.9 percent in July. Some 52.3 percent of consumers said jobs are currently not plentiful.

The percent of American consumers who expected better business conditions in the next six months declined to 16.5 percent in August from 19 percent. Some 17.7 percent say conditions will be worse, the most since October.

By comparison, the Bloomberg Consumer Comfort Index slumped in the week ended Aug. 19 to minus 47.4, the lowest level since January. The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment improved after dropping a month earlier to the weakest level of the year.

Increased optimism may signal households are inclined to step up spending. Purchases by consumers rose at a 1.5 percent annual rate in the second quarter, down from a 2.4 percent rate in the previous three months, according to Commerce Department data. An Aug. 30 report may probably show spending climbed in July by the most in five months, economists project.

Labor Market

A pickup in job growth probably helped sustain demand last month. Payrolls increased by 163,000 in July, the most in five months, according to Labor Department figures released Aug. 3.

Stock prices have also risen, making consumers feel better about their financial situation. The Standard & Poor’s 500 Index has advanced 2.3 percent in August through yesterday and is on pace for its third straight monthly gain.

At the same time, the jobless rate rose to a five-month high of 8.3 percent in July. The prices Americans are paying at the gas pump may also weigh on consumer confidence and spending. The average price of a gallon of regular gasoline has climbed 23.5 cents this month to $3.76, according to AAA, the nation’s largest auto club. Since reaching a low of $3.33 on July 1, the average has climbed 43 cents.

Bloomberg News

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