Manufacturers Take Note: Consumers Remain Cautious

In July, for the second consecutive month, the Conference Board's consumer confidence index posted a slight increase, rising to 106.5 (1985=100), up 1.1 percentage points from June's 105.4.

The numbers are consistent with a slowing, although not recession bound, U.S. economy.
"Consumer confidence continues to hold steady, with the prognosis little changed from last month," said Lynn Franco, director of the Conference Board's consumer research center, on July 25 as the latest data were released. "Present day conditions remain favorable, though not as strong as earlier this year. Expectations for the months ahead remain cautious and also below levels earlier this year," she noted.

The latest Conference Board numbers also suggest the economy is creating a sizable number of new jobs, although not necessarily in manufacturing or sufficient to keep up with population growth. The U.S. needs to generate an average of 150,000 jobs per month to match the pace of its growing population.

In July, consumers saying that jobs were plentiful increased less than a percentage point, to 28.6% from June's 28%. Consumers characterizing jobs as hard-to-get was virtually unchanged at 19.9% in July.

Consumer confidence is a closely watched economic indicator since consumer spending accounts for about two-thirds of all U.S. economic activity.

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