Today’s report on Consumer Confidence for the month of June came in significantly better than expectations. While economists were expecting the headline reading to show just a modest increase to 93.5 from last month’s reading of 92.4, the actual reading came in at 98. That is the highest reading since October, and the best report relative to expectations since September. One caveat to keep in mind here, though, is that this data is pre-Brexit. The chart below shows the headline Consumer Confidence index dating back to 2009. At the current level of 98, the headline index is back above its long-term historical average, but still six points below the cycle high of 103.8 from January 2015.
As we do each month, we wanted to update the divide between Consumer Confidence among consumers based on income. As shown in the top chart below, both consumers with incomes above $50K and below $50K saw an increase in confidence, although the bounce for lower income consumers ($35K-$50K) was significantly larger (that group also saw a much steeper decline in confidence two months ago. Despite the improvement, the six-month average gap between the two income groups remains large (lower chart). One thing you can count on, though, is that if the weakness in equities of the last couple of days persists throughout the month you can expect to see the spread in confidence between these two groups narrow as higher income consumers with more exposure to the stock market see a hit in their overall net worth,