Lower gas prices pushed consumer confidence to the highest level since May

The Conference Board’s monthly consumer attitudes report improved to 103.2 from a downwardly revised 95.3 in July. The August number is in line with the level reached in May, and for the first time since then, the headlines index has surpassed the 100 mark, the historical benchmark.

The poll showed that Americans are less pessimistic about both their current and future economic prospects. The Current Situation Index, which measures how people perceive current business and labor market conditions, jumped to 145.4 from 139.7 last month.

The expectations index rose to 75.1 from 65.6, reflecting a move away from pessimism in short-term consumer outlook that hit a nine-year low in July.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, attributed the improvement to falling gas prices, which have fallen more than a dollar a gallon from their mid-June peak to the current national average of less than $4.

“Expectations are more sensitive to changes in gas prices,” Shepherdson said in a research note, adding that the continued fall in gas prices could be a tailwind to the survey results. “We expect further gains in September as the delayed effect of falling gas prices starts to show..

This suggests that the perception of Americans plays a key role in the trajectory of the economy.

Lynn Franco, senior director of economics at the Conference Board, said that despite the improvement, the weak expectations index indicates that the threat of an economic downturn continues to weigh on the economy.

“Recession risks persist. Inflation worries continue to recede but remain elevated,” she said.

This is an evolving story and will be updated.

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