Smith Leonard Reports August Consumer Insights

September 5, 2024  by Karen Parrish in Business Strategy, Industry   

The Conference Board Consumer Confidence Index® rose in August to 103.3 (1985=100), from an upwardly revised 101.9 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 134.4 from 133.1 in July.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—also improved in August to 82.5. As the Expectations Index for July was revised up to 81.1, August marked the second consecutive month of the Index above 80. (A reading below the threshold of 80 usually signals a recession ahead.)

“Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board.

“Consumers continued to express mixed feelings in August. Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market. Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic.”

“This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income. ”On a six-month moving average basis, purchasing plans for homes fell to a 12-year low. While buying plans for cars were little changed, buying plans for most big-ticket appliances increased slightly. Additionally, more consumers reported plans to buy a smartphone or laptop/PC in the next six months.

The Executive Summary in the insights reflected on a variety of statistics of the new orders. They were down 6% in June 2024 compared to June 2023, which follows the 3% year over year decline last month.

New orders were also down 8% compared to the prior month of May 2024. However, year to date through June 2024, new orders are still up 3% compared to 2023, though that spread has narrowed significantly with the last two months’ declines.

June 2024 shipments were down 8% from June 2023, but relatively flat with May 2024. Year to date through June 2024, shipments are down 9% compared to 2023.

June 2024 backlogs were down 6% compared to June 2023, and down 2% from May 2024.

Receivable levels were down 1% from May 2024, and also down 7% from June 2023, with both being materially in line with shipments for the same periods. Inventories and employee levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations.

In other news, real gross domestic product (GDP) increased at an annual rate of 3.0% in the second quarter of 2024, according to the “second” estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP increased 1.4%.

The increase in real GDP primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Compared to the first quarter, the acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending. These movements were partly offset by a downturn in residential fixed investment.

Sales at furniture and home furnishings stores were up 0.5% in July 2024 from June 2024 on a seasonally-adjusted basis, but down 2.4% from July 2023.

To see the whole report for August, visit Smith Leonard’s website for this report and other insights.