The Conference Board's consumer confidence index is up to 103.3 this month after an upward revision to 101.9 in July. The index is above the consensus of 100.1 in the Econoday survey of forecasters. The August reading is the highest since 104.8 in February and reflects a modest firming in consumer perceptions of economic conditions now and in the near future. The report notes that the index has held within a narrow range the past two years.

The index for present conditions is up 1.3 points to 134.4 in August, showing little change the past three months. While consumers are a little more worried about the job market, jobs are still relatively plentiful and only a little harder to find. Current business conditions are seen as broadly more positive. Perceptions of inflation pressures have shown improvement and financial conditions have helped with interest rates, particularly for home mortgages. In August, the Conference Board's average 12-month inflation expectations is down to 4.9 percent, the lowest since March 2020 and consistent the report says with slower overall inflation and declines in some goods prices. However, inflation remains high among consumer concerns.

The expectations index is up 1.4 points to 82.5 in August, its highest since 83.3 in August 2023. Business conditions are more positive for about six months from now, although consumers are a little less optimistic about the labor market and earnings potential.

The consumer confidence index in August is expected to remain little changed, at a consensus 100.1 versus 100.3 in July. US confidence has been flat and subdued.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.