Of all the reports on consumer spirits, the consumer sentiment report shows the least weakness. The consumer sentiment index rose 7 tenths from mid-month to close August at 74.3. This is up a solid 2 full points from the final July reading. Importantly, the gain is spread evenly between the first half of the month and the second half which points to a steady slope of improvement going into September.
The gain is, however, concentrated entirely in the assessment of current conditions which is at 88.7 vs 87.6 at mid-month and 82.7 for July. This rise hints at solid monthly results for general August data including consumer spending and employment.
Expectations, the other component of the headline index, did rise 6 tenths in the second half of the month, to 65.1 vs 64.5, but are down slightly from July's 65.6. Other consumer measurements, including the Conference Board's consumer confidence report and the Bloomberg consumer comfort index, also show a lack of confidence in the outlook.
Part of this lack of confidence is tied to the prospect of rising gasoline prices, which look to reduce income and reduce discretionary spending power. Inflation expectations in this report are at 3.6 percent for the 1-year outlook, unchanged from mid-month but up 6 tenths from July, and at 3.0 percent for the 5-year outlook, also unchanged from mid-month but up 3 tenths from July.
Other reports on the consumer's mood are at 2012 lows, but this report is showing resilience and is showing the best strength of the summer. Nevertheless, the reports together do point to slowing consumer activity.