She feels that it “appears that households are less concerned about both the rise in gasoline prices and the looming fiscal cliff.” The 9 point jump in the headline index was led predominantly by the surveys barometer of expectations, which also rose to a seven month high.
She writes, “This index is now consistent with third quarter annualised consumption growth of well above 2.0%. Meanwhile, the rise in the current conditions index, which largely reflects labour market conditions, was not as big.”
She continues to explain that the balance of households saying that jobs are hard to find compared with those saying that jobs are plentiful, which fell from 31.6 to 33.4, indicates that there is scope for the unemployment rate to fall slightly.
Asaf concludes that “overall, while the sharp rebound in confidence is very encouraging it remains at a relatively depressed level suggesting that consumption growth is likely to be a little better in the third quarter, but hardly spectacular.”