WASHINGTON – Americans’ confidence in the economy fell only slightly in July but stayed close to a 5 1/2-year high. The report shows consumers remain upbeat about the outlook for job growth later this year.
The Conference Board, a New York-based private research group, said Tuesday that its consumer confidence index dipped to 80.3 in July. That’s down from a reading of 82.1 in June, which was revised slightly higher and the best reading since January 2008.
Despite the slight drop in July, confidence remains well above year-ago levels. And while the hiring outlook for the short-term declined, consumers were more optimistic about the job market’s potential in the coming months.
“Overall, indications are that the economy is strengthening and may even gain some momentum in the months ahead,” said Lynn Franco, an economist for the Conference Board that oversees the consumer confidence survey.
Consumers’ confidence in the economy is watched closely because their spending accounts for about 70 per cent of U.S. economic activity. It surged in June, coinciding with a stronger job market.
Employers added 195,000 jobs in June and many more in April and May than initially reported. That brought the monthly job growth up to an average of 202,000 in the first six months of 2013, up from 180,000 a month in the final six months of last year.
The government releases the July employment report on Friday. Economists forecast that employers added 183,000 jobs, and the unemployment rate fell to 7.5 per cent from 7.6 per cent in June.
The job market has shown surprising resilience in the face of tax increases, federal spending cuts and economic weakness overseas.
Stronger hiring is not being reflected in overall economic growth at the moment. The government will release its first look at economic growth in the April-June quarter on Wednesday. That report is expected to show growth slowed to an annual rate of 1 per cent or less, down from a subpar 1.8 per cent annual rate in the January-March quarter.
Economists are hopeful that the economy will rebound in the second half of the year as the adverse impact of the tax increases and spending cuts lessen. Many are forecasting a growth rate of around 2.5 per cent in the second half of the year.
Revisions to economic growth being released Wednesday could also show stronger growth at the start of the year.
Despite recent gains, consumer confidence remains below the 90 reading that indicates a healthy economy. That level hasn’t been reached since the Great Recession began in December 2007.