Popular Economics Weekly
Consumer confidence is up led by strength in the current assessment, which points to gains for consumer readings in August. But why aren’t consumers spending more, if so? Auto sales are up, but retail sales overall are flat at the moment. The answer may be consumers are waiting for better results in next Friday’s jobs report—maybe an unemployment rate below 6 percent, anyone?
Consumer confidence rose 2.1 points to a new recovery high of 92.4 reflecting a 6.7 point surge in the present situation component to 94.6. The gain in this component reflects improvement in August employment with substantially more consumers saying jobs are now plentiful, at 18.2 percent vs July's 15.6 percent, and a bit fewer saying jobs are currently hard to get, at 30.6 percent vs July's 30.9 percent.
The problem with retail sales seems to be that households want to save more and spend less for the moment. Spending jumped in March that had been suppressed by the severe winter, so it may be an evening out of overall sales, still rising at 4 percent per annum. And ICSC-Goldman just reported sales up for the week of August 23, signaling strong back-to-school buying. Same-store sales rose 0.6 percent in the August 23 week for a very strong year-on-year rate of plus 4.2 percent. The report cites strength across most categories and general strength for back-to-school demand. So it may be seasonal factors causing the month-to-month fluctuations.
What do consumers really want, is the larger question? Next week’s jobs’ report may tell us more, as I said. If job creation continues to grow, we can see increased optimism. The Labor Department’s latest JOLTS report of job Quits and Hirings is telling us the number of job openings continues to grow. Jobs openings (yellow line in graph) increased in June to 4.671 million from 4.577 million in May and are up 18 percent year-over-year compared to June 2013.
The number of Hires (blue line) rose to 4.8 million from 4.7 million, the highest since 2006. It’s therefore only a matter of time before workers begin to fill those job openings, then look out for increased consumer spending, the main driver of economic growth and so job creation.
Harlan Green © 2014
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