Consumer Confidence At An 18 Year High… GDP At A 4 Year High…
By: Kent Engelke | Capitol Securities
Consumer confidence unexpectedly rose in August to the highest level since October 2000. Confidence was expected to decline from July’s level but instead surged, the result of jobs. The expectation’s gauge also climbed to a six-month high, also the opposite of the forecasted view.
Generally speaking, I regard sentiment surveys as a “backward-looking” indicator stating where we have been not where we are going. With this written, however, I forgot the last time I read a positive headline. Can I suggest there is a disconnect between reality and the media? Is all media just noise and job availability and rising home values trump everything?
Second quarter GDP was revised higher to 4.2%, the greatest growth in four years. The forward-looking indicators are suggesting momentum is continuing into the third quarter with consensus now suggesting growth over 4.5%. Wow!
Because of this growth, it appears inflationary pressures are accelerating over the Federal Reserve speed limit of 2.0%. All must remember the committee stated it would “tolerate” several quarters of inflation over the prescribed limit.