Lower gas prices push consumer confidence to highest level since May

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The Conference Board’s monthly snapshot of consumer attitudes improved to 103.2 from the downwardly revised 95.3 in July. The August figure matches the level it reached in May and marks the first time since then that the headline index broke 100, its historic baseline.

The survey found that Americans are less pessimistic about both their current and future economic prospects. The Current Situation Index, which measures how people perceive current business and labor market conditions, rose from 145.4 last month to 145.4 from 139.7.

The expectation index rose from 65.6 to 75.1 on the back of a reversal of pessimism in consumers’ short-term outlook, which hit a nine-year low in July.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, attributed the improvement to the decline in gas prices, which have fallen more than a dollar a gallon from their peak in June to a current national average of less than $4.

“Expectations are more sensitive to movements in gas prices,” Shepherdson said in a research note, adding that the continued decline in gas prices could be a tailwind for the research results. “We expect a further increase in September as the delayed effect of the decline in gas prices begins.

This suggests that the perceptions of Americans play a key role in the further course of the economy.

Lynn Franco, senior director of economic indicators at the Conference Board, noted that, while improving, the low reading of the expectation index suggested the threat of a downturn continues to weigh on the economy.

“Recession risks persist. Inflation concerns eased but remained high,” she said.

This is a story in development and will be updated.



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