Surge in Consumer Confidence Index Points to Economic Optimism

Did you enjoy your time off?  Feeling relaxed and more upbeat?  Well, optimism might be the name of the game.  

The nonprofit think tank The Conference Board said its consumer confidence index surged to 109.7 in June, up from 102.5 in May, to its highest level since January 2022.   The final University of Michigan consumer sentiment survey for June showed a 9% surge in overall sentiment and an even stronger surge in expectations for the future.   Notably, a key driver is receding inflation worries. Consumers’ expectations for inflation over the next year fell to 3.3% in June from 4.2% in May — a remarkably abrupt drop.

The U.S. economy began the year with more momentum than initially thought.

Gross domestic product grew at a 2% annualized rate in the first quarter, a notable upward revision from the most recent estimate of 1.3% (and the first estimate of 1.1%).  The quicker pace results from stronger export growth and consumer spending, particularly on services.

The labor market has shown only the mildest slippage from a super-hot 2022. The unemployment rate was 3.7% in May, up from 3.5% in December (the June number is due Friday).  Employers have added an average of 314,000 jobs a month, robust by any historical standard but slower than last year’s pace of 460,000 per month.  The share of 25- to 54-year-olds who are employed has kept rising this year, to 80.7% from 80.1% in December, a sign that this economy keeps putting more people in their prime working years into jobs.

And in tech, A recent survey of the Blind community — that is, the anonymous tech career forum Blind — found “56% of tech workers are open to accepting the same or lower pay in a new role” so long as it fulfills another unmet need.

45% said weathering market conditions were their primary reason; 19% mentioned company culture and work-life balance; 14% cited remote/hybrid workplace preferences.

The sentiment is positive in tech, too:  Eighty-one percent of large enterprise (LE) CIOs plan to increase their IT headcount in 2023, according to a recent survey by Gartner, Inc. Only 14% expect their IT staff to decrease, and 5% expect their headcount to remain the same.  

Some economists are starting to lean into that narrative – that conditions are good.  I’ve seen evidence of that, but more importantly, conversations with IT services companies are upbeat.     It’s always wise to be prepared for down times; that advice is eternal.  It doesn’t seem like we are IN down times, at least in the US.