WASHINGTON — U.S. consumer confidence shot to the highest level in two years this month as inflationary pressures eased and the American economy continued to show resilience in the face of dramatically higher interest rates.
The Conference Board, a business research group, said its consumer confidence index rose to 117 in July from a revised 110.1 in June. The reading was higher than than the 110.5 economists had expected and was the highest since July 2021.
Americans’ assessment of current economic conditions and the outlook for the next six months both improved.
Economists closely monitor Americans’ spirits because consumer spending accounts for around 70% of U.S. economic activity. The Conference Board index fell more or less steadily from mid-2021 to mid-2022 as surging prices ate into household budgets. But confidence has come back, in fits and starts, over the past year as inflation eased in the face of 10 interest-rate hikes by the Federal Reserve. Fed policymakers are expected to raise their benchmark rate again Wednesday to the highest level in 22 years.
The U.S. economy — the world’s largest — has proved surprisingly resilient in the face of sharply higher borrowing costs. Employers are adding a strong 278,000 jobs a month so far this year; and at 3.6% in June, the unemployment rate is not far off a half-century low.
Tumbling inflation and sturdy hiring have raised hopes the Fed just might pull off a so-called soft landing — slowing the economy just enough to tame inflation without tipping the United States into recession.
