MNI INTERVIEW: US Job Worries Grow - Conference Board
MNI (WASHINGTON) - U.S. consumers are showing more concern about the labor market and their income prospects even as businesses report continued hiring and retention of their workforce, Conference Board senior economist Stephanie Guichard told MNI.
The differential between consumers who say jobs are plentiful and those saying jobs are hard to get fell to 16.4%, the lowest since 2017, excluding the pandemic. Meanwhile, the Conference Board's expectations index, measuring confidence on income, business and the job market in the coming six months, climbed to 82.5 in August from 81.1 in July.
The rising labor market differential might be an early indicator of a slowdown in consumption, but it is unlikely to mean as much for the pace of hiring and the unemployment rate going forward, Guichard said in an interview.
"The situation is good, but this can't be lasting forever. It's too good to last. This is what is driving the labor market expectations," she said. "When we ask businesses if they're going to hire or lay off people going forward, we still have the majority saying that they're going to hire or keep their workforce constant."
The labor market remains very strong, she said. Indicators are "cooling a bit, which means that it's moving from being super hot to being still very warm."
JOBS REPORT IMPACT
Guichard, who is responsible for the production and release of the Consumer Confidence Index, said responses on the labor market were affected by the poor July jobs report and stressed it's difficult to differentiate whether experience or news is driving the responses. The Bureau of Labor Statistics reported Aug. 2 that the unemployment rate had unexpectedly jumped two-tenths to 4.3%.
"The survey was filled between Aug. 1 and Aug. 21, so obviously the [July jobs] report came at the beginning of the time when the survey was in the field and so it may have affected their views," she said about respondents.
Consumers’ perceived likelihood of a U.S. recession over the next 12 months remained at 66%, well below the 2023 peak. And the Conference Board's overall gauge of consumer confidence rose to 103.3 this month from 101.9 in July, a six month high and driven by "an improvement in consumers' assessment of the business conditions right now and also in the future for the next six months to one year," Guichard said.
INFLATION EXPECTATIONS FALLING
Average 12-month inflation expectations fell to 4.9% in August, the lowest since March 2020 and consistent with slower overall inflation and declines in some goods prices, which could be due to summer promotions, Guichard noted.
"Inflation expectations are dropping" and "has been declining slowly since it peaked in the first half of 2022," she said, downplaying the level that is still more than double the Federal Reserve's 2% goal and emphasizing the broader trend.
Despite average expectations for interest rates on credit cards and mortgage rates to come down, consumers are "very cautious" about making big-ticket purchases, Guichard said. Federal Reserve officials earlier this year cited pent-up demand as a reason not to begin lowering interest rates. (See: MNI INTERVIEW: Fed Likely To Make Series of 25bp Cuts - Blinder)
The August Conference Board report showed buying plans for big-ticket appliances were up on average but the increase was driven by only a few items and purchasing plans for homes in the next six months fell to a new 12-year low.