US consumer confidence highest of 2019 as tariff shock abates

Jul 30, 2019: American consumer optimism rebounded unexpectedly this month among American consumers, recovering from a trade-war fright in June, according to a survey released Tuesday.

Consumers again say jobs are plentiful, business conditions are good and incomes are likely to rise in the near future, according to Conference Board's monthly report.

The gains in consumer confidence overshot economists' expectations and should support consumption in the coming months while the economy slows.

The Conference Board's consumer confidence index rose more than 10 points to 135.7 in July.

“After a sharp decline in June, driven by an escalation in trade and tariff tensions, Consumer Confidence rebounded in July to its highest level this year,” Lynn Franco, the Conference Board's head of economic indicators, said in a statement.

The report coincided with Commerce Department data showing a fifth consecutive monthly increase in personal income, suggesting retail spending should be healthy in the summer.

The Conference Board data showed views about the present and expectations for the near future rose sharply.

Confidence dimmed in June after trade talks with Beijing collapsed in May, prompting Trump to jack up duties on hundreds of billions in Chinese imports. He also threatened Mexico with steep tariffs in a border policy dispute.

But the US leader agreed with Chinese President Xi Jinping late last month to resume negotiations and cease further hostilities.

The share of survey respondents who say business conditions are good rose to the highest level since February while those saying jobs are plentiful hit its highest point since April.

Most survey respondents expected business conditions, employment and incomes to remain about the same over the next six months — but the share of those expecting improvements in each rose modestly.

RDQ Economics said Tuesday the confidence data weakened the case for cutting interest rates, as the Federal Reserve is widely expected to do on Wednesday.

The survey “points to strength that is inconsistent with the need for an insurance cut and the case for one-and-done for now has grown,” RDQ said in a note to clients.

AFP/APP

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