Consumer Confidence is Rising

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Consumer Confidence is Rising
| published July 29, 2014 |

By Thursday Review staff

Despite some signs that the economy has its weak spots—such as new home sales and new home prices—as well as troubling indications that many mid-tier retailers are facing not merely tough times, but potential extinction—there have been several recent reasons to celebrate an improving economy.

Jobs have increased, for one, with the biggest surge in hiring in several years. June saw the creation of 288,000 new jobs—a jump even larger than the predictions of some of the leading analysts. The unemployment rate for June fell to 6.1%, the lowest rate since September 2008.

Another reason to think we might be finally moving out of the toxic aftermath of the Great Recession? American consumers are measurably more confident about their spending and about the economy. In fact, the U.S. feels better about the overall health of the economy than any such indicator in more than seven years.

The so-called Consumer Confidence Index rose to 90.9 in July, the highest level in seven years, according to the Conference Board. July’s spike was third consecutive monthly increase, and another reason some economists suggest the worst of the aftereffects of recession may be over. The Consumer Confidence index reached its lowest point in February 2009, when it hit 25.3. The improving job sector may have been the primary factor in the surge in consumer confidence. According to the Conference Board, consumers felt better about the labor market—accounting for 15.9 percent of those who felt confident in the health of the economy.

Though home sales are still sluggish, consumer spending in other areas has risen—especially in car sales. Toyota, Honda, Ford, Chrysler, and even beleaguered General Motors, all saw a spike in sales of new cars over the last three months.

Of greater concern to some economists, however, is credit card debt, which is now running higher for most Americans than ever before. Some analysts say that even when people become re-employed, simply re-entering the workforce is not enough to establish stability in their budgets. During the Great Recession, many Americans turned to credit cards to pay for household essentials and other necessities, and it may take years for that debt to be paid off—especially when workers are earning less money than they did on the previous job. Another problem may be rising prices, especially food prices and some energy costs—a direct result of a harsh U.S. winter and severe drought in western states.

Still, most economists and business analysts think that the U.S. economy will continue to ramp up throughout the remainder of 2014.

Related Thursday Review articles:

New Homes Sales Stuck in Recession?; Thursday Review; July 24, 2014.

Is This Recession Over? Yes, No, Maybe; Thursday Review; June 17, 2014.