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Updated: U.S. Consumer Confidence Near Seven-Year High; Hits 90.9 In July

By Kitco News
Tuesday July 29, 2014 10:00 AM

Editor's Note: The article was updated to include more information from the report, comments from The Conference Board's director of economic indicators and comments from economist and analysts

(Kitco News) - U.S. consumers continued to feel extremely optimistic in July, according to the latest data from the Conference Board. 

On Tuesday, the board reported that its monthly Consumer Confidence Index rose to 90.9, up from June’s revised increase of 86.4; last month’s initial reading was 85.2. According to consensus reports, economists were expecting to see the index rise to about 85.5.

Jim Wyckoff, senior analyst at Kitco.com said the surprise jump in consumer confidence impacted gold as the price dropped more than $4 on the initial reaction the the numbers.

"Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2). Strong job growth helped boost consumers’ assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations," said Lynn Franco, director of economic indicators at The Conference Board.

The board said that the Present Situation Index increased to 88.3 from the previous reading of 86.3; at the same time the Expectation Index rose to 92.7 from June’s level of 86.4.

The report also said that consumers’ outlook on the labor market has improved as those saying jobs are “plentiful” increased to 15.9%, up from the previous level of 14.6%; consumers claiming jobs are “hard to get” remained unchanged at 30.7%.

Consumers’ one-year inflation expectations also dropped in July to 5.4% from the previous reading of 5.5%.

Although consumer confidence hit near a seven-year high, Ryan Littlestone, currency analyst at Forexlive.com, said that recent numbers from retail sales and durable goods shows that the optimism has not completely filtered through entire economy.

“That said, those numbers lag this report somewhat so it could point to an uptick when we get the July retail and durable numbers,” he said.

Andrew Grantham, senior economist at CIBC, agreed that stronger optimism doesn’t always result in increased spending and that “detail of today’s report doesn’t suggest households will be opening their wallets any wider in the coming months.”

Paul Ashworth,  chief U.S economist at Capital Economics, said the employment outlook points to a much stronger-than-expected labor market, which could put some pressure on the Federal Reserve.

“One thing that Fed officials might want to note during the two-day FOMC meeting that kicked off today is that the number of respondents saying that jobs are plentiful is rising rapidly,” he said. “That decline strongly suggests that the amount of slack in the labor market really is diminishing quite rapidly, which many Fed officials still aren't willing to admit.”

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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