US: Improvement in consumer confidence suggests a pickup in consumer activity at the end of Q2 – Wells Fargo

Economic data released on Tuesday regarding consumer confidence in June came in above expectations. The better-than-expected outturn is a welcome improvement after last week’s disappointing personal income and spending report for May, point out analysts at Wells Fargo. 

Key Quotes: 

“In the wake of last week’s disappointing personal income and spending report for May, this better-than-expected improvement in June consumer confidence suggests a pickup in consumer activity at the end of the second quarter. Labor market measures look better than at any time in 20 years.”

“When it comes to the state of mind for consumers, the theme for the first half of 2021 has been one of rising confidence. The year began on shaky footing with consumer confidence at 87.1, only a few notches ahead of where it was at its nadir during the worst of the pandemic when confidence fell to 85.7. But as stimulus checks rolled in, vaccination rates picked up and case counts fell, consumers regained a level of confidence not seen since before the pandemic.”

“As the stimulus checks dry up and other temporary measures like enhanced jobless benefits fade, it might be reasonable to wonder about the outlook for confidence in the absence of these factors. Some clues in today’s report point to sustainability from other areas, like the job market for example.

“Although short-term inflation prospects rose in consumers’ assessment, the higher price environment does not appear to be holding back spending intentions. The share of consumers planning to purchase homes, automobiles, and major appliances all rose.”

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