WASHINGTON -- Stock market uncertainty and Asia's continuing economic crisis had little effect on June's strong consumer confidence, according to the Conference Board's monthly survey of 5,000 households.
Indeed, June's preliminary score placed the overall index at 137.6 points, its highest mark since the survey began in 1969. June's score bested February's record of 137.4 points and erased a near one-point drop to 136.3 in May. Despite such dips, the Consumer Confidence Index has remained in sight of the 29-year record since soaring 9.1 points in February to set the original record.
To analysts, the reason for strong confidence levels is simple: On the whole, consumers are working and their wallets are filled.
"The strong American job market continues to fuel consumer optimism with little letup in sight," explained Lynn Franco, associate director of the Conference Board's Consumer Research Center in New York. So, she said, "despite continuing turmoil in Asia and growing questions about the strength of the stock market, consumer confidence continues to top year-ago levels." Franco said upcoming index numbers in July and August should signal "whether the six-month economic outlook is holding or weakening."
For June, though, consumer reaction to current business conditions and their expectations for the coming six months both improved. The index's Present Situation component rose to 137.6 in June from 136.3 in May, while the Expectations component rose to 114.2 in June from 113.3 in May. Last month, the Present Situation index rose 1.6 points from April, while the Expectations Index dipped 2.5 points.
According to the Conference Board's survey, most American consumers see both the current economy and job market as healthy and strong. June's employment outlook nearly mirrored May's readings, with 44.4% of respondents saying jobs are plentiful and 13.7% saying jobs are hard to find.
But looking forward six months, June's pattern was a little more shaded. For example, 17.8% expect business conditions to get better, down from 19.3% in May. And yet, only 4.6% think the economy will worsen, compared with nearly 6% in May. Those consumers expecting fewer new jobs in the next six months dipped to 10.6% in June, down from about 12% in May. The survey also reported a slight fall-off in income expectations: About 25% think their wages will rise during the next six months, down from 27.5% last month.
Ira Silver, chief economist for JCPenney Co., Plano, Texas, said the overall rise in Consumer Confidence can be explained by the economy's underlying fundamentals -- wage growth, low unemployment, low inflation -- which continue to remain "extremely positive."
Silver agreed that stock-market fluctuations have had little effect on consumer confidence. "The fluctuations have been relatively minor," he said. "And every time we have a significant decline, a week later it's back to where it was, which if anything makes people feel more comfortable."
Asia also doesn't seem to be a consumer concern. "I don't think most people are worried about Asia," he said. "Most people are benefiting from the fact the goods coming out of Asia are cheaper. So the positives of the Asian situation, at least up to now, have more than offset the negatives."
The result, said Silver, is that "people appear to be buying and retail sales are strong and that consumers will continue spending."
