Confidence among American consumers rose in August to the highest level in nearly 18 years as their assessment of current conditions improved further and their expectations about the future rebounded.
The Conference Board reported Tuesday that its consumer confidence index rose to 133.4 in August, up from a reading 127.9 in July. It was the highest reading since confidence stood at 135.8 in October 2000.
Consumers' confidence in their ability to get a job and in the overall economy are seen as important indicators of how freely they'll spend, especially on big-ticket items such as cars, in coming months. Consumer spending accounts for 70 percent of economic activity.
"Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018," said Lynn Franco, director of economic indicators at the Conference Board. "These historically high confidence levels should continue to support healthy consumer spending in the near term."
"The data continue to signal a downtrend in the unemployment rate," Jim O'Sullivan, chief U.S. economist at HFE said in a note. "In short, confidence rose to a new post-2000 high, helped by an improving labor market."
The overall U.S. economy, as measured by GDP, grew at a 4.1 percent rate in the April-June quarter, the best performance since 2014. That estimate will be revised Wednesday. Many economists believe growth has slowed a bit in the current quarter to around 3 percent but will remain far ahead of the weak 2.2 percent GDP growth rate in the first quarter.
Not all indicators in the report were rosy. Analysts at Capital Economics noted that some indicators show growth may slow in the near future.
The report "is primarily a reflection of the current strength of the economy," the analysts wrote in a note on Tuesday, "but with the expectations index rising more modestly in recent months, it does little to dispel the idea that economic growth and household spending may slow further ahead."