US Consumer Confidence: Things are less awful – Wells Fargo
Data released on Friday showed a rebound in Consumer Confidence in August according to the University of Michigan’s preliminary report. Analysts at Wells Fargo point out the relief comes amid a modest bounce in consumer sentiment from what was an all-time low in June. They take little solace in the slightly better sentiment figures.
Key Quotes:
“On the surface the University of Michigan's latest survey of consumer sentiment was largely positive, though the details are arguably less encouraging. Overall sentiment rose for the second month in a row and came in just above consensus expectations. To some extent, this modest improvement may say more about relief at the pump amid a trend decline in gas prices than it does about a fundamental change in consumer psyche.”
“This is not so much a sign of things getting better as it is an indication that things are less awful as gas prices retreat from all-time highs. It's not good out there for consumers right now, it's just less bad.”
“Earlier this week the July consumer price data came in softer-than-expected and caused some analysts to anticipate less Fed tightening. But taken in the context of some upward surprises to the prior two months of data, the July reprieve in price growth has not left inflation on materially lower footing. The Fed likely will interpret this uptick in expectations as a further indication inflation has yet to indicate the start of a sustained cooling, and thus further supports our view that the FOMC will opt to raise the federal funds rate by 75 bps at its next meeting in September.”