US Consumer Confidence Continues to Rise, but Overall Optimism Remains at Historical Low

According to APP of Zhitong Finance, the US consumer confidence index has continued to rise for the second month in a row, but overall optimism remains at a historical low. The Michigan University Consumer Confidence Index increased by 1.6% (1.0 point) to 61.7, which is the highest level since February this year. However, compared with last year's same period, the index has fallen by 7.1% (4.7 points), reflecting consumers' continued pessimistic outlook on economic prospects.

The Michigan Consumer Confidence Index is a monthly survey report published by the University of Michigan, measuring consumers' confidence in economic, personal financial situations, business environment, and consumption intentions. The survey releases two sets of data each month: preliminary values and final values.

Survey project director Joanne Hsu noted that consumer sentiment has improved slightly this month, but the growth rate is limited, with the overall index only increasing by 1 point compared to last month. Among them, the current economic conditions index (CECI) rose nearly 5% to 68.0, which is the highest level since January this year and continues to improve; while the consumer expectations index (CEI) fell slightly to 57.7, which is the lowest point since April.

Hsu added that stock investors' confidence has increased, partially offsetting the decline in non-stock investors' confidence. Worth noting is that, regardless of political party affiliation, consumer confidence levels have all shown a slight increase this month. However, overall, consumers remain lacking in confidence about the US economy's direction, despite some concerns having been alleviated compared to April.

From a historical perspective, the current index of 61.7 is far below the levels seen during previous economic downturns. Data shows that since 1978, the average value of the Michigan Consumer Confidence Index has been 84.4, while the current reading is 26.9% and 25.9% lower than these two averages, respectively. In a data series spanning 571 months, the current index of 61.7 ranks in the sixth percentile, highlighting the low level of confidence.

The Michigan Consumer Confidence Index typically exhibits certain fluctuations, with an average monthly change of 3.1 points. This month's change of 1.0 point is at a relatively gentle level. Data shows that this index has a correlation with actual US GDP, and the three-month moving average trend generally aligns with economic fundamentals.

Worth noting is that this survey also analyzes consumer sentiment by party affiliation. Data shows that consumer confidence has exhibited both positive and negative fluctuations in previous administrations, indicating that changes in emotional state are more closely related to economic conditions than a single political factor.

From a composition perspective, the current economic conditions index (CECI) recorded 68.0, up 4.9% from last month and 8.5% higher than the same period last year, exceeding market expectations of 66.8. In contrast, the consumer expectations index (CEI) was 57.7, down 0.7% from last month and 16.1% lower than the same period last year, below expectations of 58.6.

Regarding inflation expectations, consumers' outlook on future one-year inflation has continued to fall for the second month in a row, from 5.0% in June to 4.5%, which is the lowest level since February this year; however, it remains higher than the levels seen after the last presidential election in December. Long-term inflation expectations have also fallen for the third consecutive month, from 4.0% in June to 3.4%, which is the lowest point since January this year, although still higher than the end-of-year level.

Besides the Michigan index, another widely followed consumer confidence indicator is the Consumer Confidence Index released by the United States Conference of Mayors, which provides a different perspective on consumer psychology. This index focuses more on employment and labor market performance, unlike the Michigan index's emphasis on household finance and inflation expectations. Although it has greater volatility, the two indices generally maintain a consistent long-term trend.

Overall, US consumer confidence in July has shown a slight increase, but remains affected by factors such as inflation pressure and economic uncertainty, with overall confidence levels still below historical averages, reflecting consumers' continued fragile outlook on the economy's recovery. In the coming months, if macroeconomic and inflation trends do not show significant improvement, consumer momentum may continue to face pressure.