When American Consumers Are Depressed, They Go Shopping

Consumer confidence has been relatively depressed for the past couple of years according to the Consumer Confidence Index (CCI) and Consumer Sentiment Index (CSI), which are based on surveys conducted by The Conference Board and the University of Michigan. The Consumer Optimism Index, which we calculate as the average of the CCI and CSI remains down and out (chart).

The CCI tends to be more sensitive to employment, while the CSI tends to be more sensitive to inflation. Consumers are showing some signs of concern that job availability is diminishing. Inflation has moderated significantly on a y/y basis, but prices are still significantly higher than they were before the pandemic.

Nevertheless, the economy has been expanding led by consumer spending. Real wages have been rising. Unemployment remains historically low. Stock prices and home prices are at all-time highs. Real consumption per household is at a record high (chart).

The current conditions component of the CCI is falling as the availability of jobs has declined from when the labor market was red hot during the pandemic (chart). We think the labor market is normalizing rather than tanking.

The same CCI survey shows that consumers are just as confident about the job situation currently as they were before the pandemic (chart).