Consumer confidence in the United States soared in August to an 18-year high and hit seldom-reached peaks, reflecting surging growth in the economy and the lowest unemployment rate in almost two decades.
The consumer confidence index jumped to 133.4 from a revised 127.9 in July, the Conference Board said.
How good is that? It’s the highest level since October 2000 and beats the previous post-Obama peak of 130 in February.
The only other period in which consumer confidence was higher was during the Internet-fueled boom of 1997 to 2000, based on official monthly readings that go back to 1977.
The index was also higher in the mid-1960s, but the survey was only conducted every two months for the first decade of its existence.
What happened: The present situation index, a measure of current conditions, climbed to 172.2 from 166.1. That’s also the highest level since 2000.
The future expectations index advanced to 107.6 from 102.4
Big picture: Americans have rarely felt this good about the economy. Millions of people have found work, layoffs have fallen to levels last seen in the late 1960s, incomes are rising and businesses are investing. The U.S. economy expanded at a lusty 4.1% annual clip in the second quarter.
What they are saying? “Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term,” said Lynn Franco, director of economic indicators at board.
Market reaction: The Dow Jones Industrial Average DJIA, -0.33% and the S&P 500 SPX, -0.24% both rose in Tuesday trades, with the S&P hitting another record. The stock market has surged after President Trump announced a pending new free-trade deal with Mexico.
The 10-year Treasury yield TMUBMUSD10Y, -0.35% rose to 2.88% to extend a recent upswing. Bond yields had climbed to as high 3% earlier this year before retreating.
The employment cost index, a gauge of total compensation for civilian workers, increased 0.6% in the second quarter. The cost of pay and benefits jumped 2.8% in the 12-month period ended in June, the highest yearly growth rate in nearly a decade.
Wages alone gained 2.8% over the past 12 months, which also reflected a near 10-year high.
Growth in benefits outpaced wages in the second quarter. Wages were up 0.5%. Benefits, which cover health care, retirement plans and other items, jumped 0.9%. That marks the fastest pace in four years.
Meanwhile, private workers fared better than the public sector. Total compensation in the private industry rose 2.9%, while government workers saw a 2.3% increase.
In a separate report, the Commerce Department said the price index for personal consumption expenditures rose 2.2% year-over-year in June, another sign that inflation is trending higher. The Federal Reserve plans to raise rates two more times in 2018, bringing the annual total to four, to counter rising inflation.
James E Windsor, Overpasses News Desk
August 31st, 2018