Australian consumer confidence figures surged in July and US consumer confidence figures have been released showing a similar surge. The US Conference Board survey for August showed a bounce back to 101.5 after July’s drop to 93.4 which was a similar move to Australia’s bounce. The survey indicated US consumers had become more optimistic “primarily due to a more favourable appraisal of the labour market.”
Consumer confidence typically increases when the economy expands and decreases when the economy contracts. It is seen as an important indicator of an economy’s short term health and in Western countries an estimated 60-70% of economic activity, or GDP, is in the form of private sector consumption.
The last two months’ US figures are likely to be the result of the Greek crisis taking centre stage in late June and early July, and a subsequent resolution a few weeks later. However, the latest figures are the result of a survey ending 13 August and thus don’t include the latest bout of share market volatility and so there’s some chance consumer confidence may be affected in the next survey.