In July, personal income stayed flat, while a slight increase was expected after the significant decline in June (due to the unwinding of one-time transfer payments from the Obama administration). Wages and salary rose by 0.1%. Personal spending came out in line with expectations, rising by 0.2% and the previous figure was upwardly revised from 0.4% to 0.6%. The gain in consumer spending was however partially due to the government’s “cash for clunkers” program to buy new cars. The savings rate dropped from 4.5% to 4.2% in July.
The final figure of Michigan consumer confidence showed an upward revision, compared to the preliminary estimate. The headline index rose from 63.2 to 65.7, while a final figure of 64.0 was forecasted. Both the economic conditions (66.6 from 64.9) and outlook (65.0 from 62.1) were upwardly revised. Nevertheless, compared to last month, Michigan consumer confidence is still slightly lower.
EMU: economic confidence improves further in August
In August, European Commission economic confidence improved from 76.0 to 80.6, above the consensus estimate. The breakdown shows that the improvement was led by services confidence (-11 from -18), but also business (-26 from -30), consumer (-22 from -23) and construction (-32 from -33) confidence improved, while retail confidence deteriorated somewhat (-14 from -13). Remarkable was however the development in consumers’ price expectations which dropped from -12 to -16, indicating that consumers are expecting a further downtrend in prices. The business climate indicator rose from -2.7 to -2.21.
