by Matthew Rusling
WASHINGTON, Aug. 30 (Xinhua) -- The U.S. Consumer Confidence Index increased in August after three consecutive monthly declines, indicating that consumers are more upbeat, despite surging inflation and economic uncertainty.
The Conference Board's Consumer Confidence Index now stands at 103.2, up from 95.3 in July, and its Present Situation Index - based on consumers' assessment of current business and labor market conditions - improved to 145.4 from 139.7 last month.
The Conference Board's Expectations Index - based on consumers' short-term outlook for income, business, and labor market conditions - increased to 75.1 from 65.6.
"Consumer confidence increased in August after falling for three straight months," said Lynn Franco, senior director of economic indicators at The Conference Board, noting that concerns about inflation continued their retreat but remained elevated.
The Present Situation Index recorded a gain for the first time since March. The Expectations Index likewise improved from July's nine-year low, but remained below a reading of 80, suggesting recession risks continue, Franco said.
"Meanwhile, purchasing intentions increased after a July pullback, and vacation intentions reached an eight-month high," Franco said.
Looking ahead, Franco said August's improvement in confidence may help support spending, "but inflation and additional rate hikes still pose risks to economic growth in the short term."
Consumers' appraisal of current business conditions was more favorable in August, with 19.2 percent of consumers saying business conditions were "good," up from 16.3 percent in the previous month.
Just over 23 percent of consumers said business conditions were "bad," down from 24.2 percent.
Consumers' assessment of the labor market was mixed.
Forty-eight percent of consumers said jobs were "plentiful," down from 49.2 percent, while 11.4 percent said jobs were "hard to get," down from 12.4 percent.
Consumers were more positive about the short-term business conditions outlook in August, with 17.5 percent of consumers expecting business conditions to improve, up from 13.7 percent.
Just over 22 percent expect business conditions to worsen, down from 26.2 percent.
Consumers were more optimistic about the short-term labor market outlook, with 17.4 percent of consumers expecting more jobs to be available, up from 15.1 percent. Just over 19 percent anticipate fewer jobs, down from 21.1 percent.
Consumers were more positive about their short-term financial prospects, with 15.8 percent of consumers expecting their incomes to increase, up from 15.3 percent.
A bit less than that - 14.5 percent - expect their incomes will decrease, down from 15.5 percent.
"Today's better than expected rebound in consumer confidence offers some good and bad news for the U.S. economy," Desmond Lachman, senior fellow at the American Enterprise Institute, told Xinhua.
"The good news," Lachman said, "is that falling gas prices and easing inflationary pressures are boosting consumer confidence. That should be supportive of economic growth."
"The bad news is that strengthening consumer confidence will reinforce the Fed's belief that it needs to keep aggressively raising interest rates to slow the economy and to cool the hot labor market," Lachman said.
This increases the likelihood that the Fed will increase interest rates by 75 basis points, which could create a strong headwind for the equity market, according to Lachman.
The number of job openings in the United States rose to 11.2 million by the end of July, as the imbalances between labor market supply and demand remain, the U.S. Labor Department reported Tuesday.
The latest data indicated that hiring demand remains strong despite that the Federal Reserve has been attempting to cool demand by raising interest rates aggressively in recent months.
The July unemployment report, which was released early this month, showed that the number of unemployed edged down to 5.7 million. With the increase in job openings, there were nearly two job positions per available worker, signaling widening imbalances.
Indeed, the worst inflation in 40 years is one of the reason why many Americans remain uneasy over the direction of the economy.
Moreover, the U.S. Federal Reserve must do an intricate balancing act by raising interest rates enough to cool inflation while avoiding triggering a recession. ■