US: Recent loss of momentum doesn't bode well for consumption – Wells Fargo
|Conference Board’s consumer confidence indicators dropped in July for the third consecutive month. According to analysts at Wells Fargo, point out high inflation, rising interest rates and volatile financial markets weighed on consumer confidence.
Key Quotes:
“The third consecutive monthly decline in consumer confidence to 95.7 in July came with somewhat unsettling developments in the details, with the present situation index falling by the most in 12 months and the expectations component hitting its lowest since 2013.”
“As optimism has faltered, so too has consumers' assessment of the labor market. The so-called labor differential, which is the difference in those reporting jobs as “plentiful” less those who report jobs as “hard to get”, slid to its lowest reading in over a year to 37.8%.”
“Most data in the July confidence report moved in the wrong direction. While lower confidence does not always lead spending lower, the recent loss of momentum doesn't bode well for consumption. It's the directional move and rate of change in confidence that is more important than the absolute level, and the overall consumer confidence index is now 12.9 points lower than where it was just three months ago. That sharp move lower may provide an added headwind to spending.”
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