U.S. consumer confidence records new high in June, bolstered by rebounding economy

Consumer confidence in the United States reached a new record high in June, as Americans became more optimistic about the economy and employment prospects.

From 120.0 in May, the Conference Board's consumer confidence index soared to 127.3 this month, the highest level since February 2020. The index was expected to be 119.0 by economists surveyed by Reuters.

As more vaccinations allowed the United Areas to reopen in earnest, particularly in big states like California and New York, there is a solid desire for long-lasting manufactured products like automobiles and home appliances, indicating strong economic momentum.

Many people planned to travel on vacation in the next six months, primarily in the United States, which could raise demand for services and stimulate consumer spending.

“While short-term inflation expectations increased, this had little impact on consumers’ confidence or purchasing intentions,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. “In fact, the proportion of consumers planning to purchase homes, automobiles, and major appliances all rose—a sign that consumer spending will continue to support economic growth in the short-term,” Bloomberg reported.

Meanwhile, National house prices increased to the greatest level in more than three decades in April, according to separate data released on Tuesday.

The labor market, which is constantly improving, is given increasing weight in the survey.

The current situation measure in the poll climbed to 157.7 from 148.7 last month, based on consumers' assessments of current business and labor market circumstances while the consumer expectations index increased to 107.0 from 100.9.

Labor Market Differential

In June, the Conference Board survey's so-called labor market differential, which is based on respondents' opinions on whether jobs are plentiful or difficult to get, reached a 21-year high of 54.4 percent.

This metric has a strong relationship with the unemployment rate reported by the Labor Department in its regularly watched employment report. The increase in the so-called labor market differential bodes well for Friday's employment report. There are a total of 9.3 million job vacancies, which is a new high.

Meanwhile, 18.6% of respondents expect their earnings to rise in the next six months, the largest percentage since March 2020.

Unemployment benefits, including a $300 weekly check from the government, child care issues, and worries of getting the virus despite widely available immunizations, as well as pandemic-related retirements, have all been cited for keeping workers at home.

While the Republican governors in 21 other states including Florida and Texas will phase off unemployment benefits between June 19 and July 10.

In Tuesday's survey of US consumers, 37.4 % said they planned to take a vacation in the next six months, the highest level since October. 

According to a separate report released on Tuesday, the S&P/Case Shiller composite index of 20 metropolitan regions rose 14.9 % year over year in April, the most since December 2005. This comes after a 13.4% rise in March.