- US consumers' assessment of the current economy just got its highest reading since November 2000, according to data from The Conference Board's Present Situation Index.
- The gauge, which tracks consumers' current view of business and labor market conditions, climbed to 177.2 in August, up from 170.9 in July.
- The board also reported data showing consumer confidence contracted less than expected in August.
- The decline in confidence is likely a direct result of rising economic uncertainty amid President Trump's ongoing trade war with China.
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Americans' view of the current economy is the most favorable it's been in 19 years as a strong job market has offset some concerns about the trade war between the US and China.
The Conference Board said its Present Situation Index — a metric that evaluates consumers' view of the current business and labor market environment — rose to 177.2 in August, up from 170.9 in July.
"While other parts of the economy may show some weakening, consumers have remained confident and willing to spend," Lynn Franco, Senior Director of Economic Indicators at The Conference Board said in a statement.
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She continued: "However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers' optimism regarding the short-term economic outlook."
The jump was accompanied by a slight drop in consumer confidence, which fell to 135.1 from 135.8 in July. The decline was less than the one forecasted by economists surveyed by Bloomberg.
Here are some highlights from the data:
- The percentage of consumers who believe business conditions are "good" rose to 42% in August from 39.9% in July, while those who said conditions are "bad" decreased to 9.8% from 11.2%.
- Consumers are also feeling good about the job market. The portion that said jobs are "plentiful" rose to 51.2% from 45.6%, while those who claimed jobs are "hard to get" slid to 11.8% from 12.5%.
- Consumer's short-term outlook isn't so optimistic as the outcome of the trade war looms. The percentage of people who expect business conditions will improve six months from now decreased to 21.9% from 24%. Those predicting business conditions will worsen climbed to 10% from 8.4%.
The data comes on the back of mounting signs that the economy could be headed for a downturn. A key measure of US manufacturing fell for the first time in a decade in August. Meanwhile, IHS Markit's preliminary gauge of domestic factory activity recently slid its lowest level since September 2009.
The US also saw a closely watched section of the yield curve — which tracks the spread between long- and short-dated Treasurys — invert for the time since 2007 That's considered a recession sign, as the occurrence has preceded every economic downturn since 1950.
Continued trade tensions between the US and China have also kept investors on edge as they await a restart in negotiations.
