Consumer confidence is lukewarm at the moment, with views of current business conditions improving, but views of the labor market deteriorating.

None of the movements were dramatic in the Conference Board’s August Consumer Confidence Index. The nonpartisan, nonprofit think tank and business membership organization has been measuring consumer confidence since 1967.

The August index reading came in at 103.3, up slightly from an upwardly revised 101.9 in July.

The two components of the overall Consumer Confidence Index, the Present Situation Index and the Expectations Index, both saw small increases as well.

Conference Board Senior Economist Stephanie Guichard called this month’s index reading “kind of average.”

“It’s not exceptionally good, but it’s not bad,” she said.

August’s Consumer Confidence Index remained within a narrow range that’s prevailed over the past couple of years. The index reading was above 100 from the summer of 2016 until the spring of 2020.

The index, which reached as high as 137.9 in the last decade, got as low as around 86 early in the pandemic.

Now, people are feeling the slight increase in unemployment, Guichard said.

“I think the labor market is where most of the action has taken place in recent months,” she said.

It’s not that the jobs market is in shambles, but it’s no longer red hot.

The U.S. economy added 114,000 jobs last month, which was the second-lowest total in the last year. And the unemployment rate went up to 4.3%. Until May, the unemployment rate had stayed below 4% for two straight years.

“The story there is the labor market was very strong. It’s a very good situation, but consumers are like, ‘Well, we’ve seen this story before. It doesn’t last forever, so at some point the labor market is going to deteriorate.’ So this is what’s affecting the expectations,” Guichard said.

Business conditions were seen as better now and better going forward, she said.

That was what drove the increase this month in the Consumer Confidence Index.

Guichard said there are positives in the way consumers feel. Americans expect interest rates to decline and people have seen inflation slow.

The Conference Board asked people about their year-ahead inflation expectations. Americans expect inflation to be 4.9% a year from now.

That might be a shocking number in light of current inflation that’s dipped below 3%.

Guichard highlighted that people tend to overestimate future inflation, and the trend of lower inflation expectations is more important than the raw survey figure. People were expecting 8% inflation in early 2022 and they’ve seen a steady decline in inflation expectations since then.

“We are not back totally at the pre-pandemic level, but we are getting very close,” she said.

She noted that even before the pandemic, and even when real inflation was very low, inflation expectations in their survey were around 4.5%. And the current inflation expectations are the lowest since March 2020.

People might also overestimate the chances of a recession.

Currently, about two-thirds of people perceive a recession to be somewhat or very likely in the next 12 months. But that’s down from a peak of 73% in May 2023.

According to Guichard, recession expectations among American consumers are lower and stable. Purchasing plans for homes fell to a new 12-year low, while buying plans for cars improved slightly.

Americans showed more willingness to buy other big-ticket items, such as appliances and electronics.

“House prices are still very high, and then you get the double heat of the very high interest rates,” Guichard said.

The National Association of Realtors reported last week that the typical existing-home price is now $422,600 — up about 4% from last year, up 16% in the last three years and up 50% in the last five years.

A typical home would have cost $280,400 in July 2019, according to historical NAR data.

Earlier this month, mortgage rates plunged and are now lingering just under 6.5%, according to Freddie Mac.

A typical 30-year fixed-rate mortgage has been as high as 7.79% within the last year.

Freddie Mac said last week that it expects rates to gently slope downward through the end of the year. \But a similar mortgage three years ago would have cost a buyer less than half of what they have to pay now.

The Conference Board’s survey asked people to assess their family’s financial situation.

Consumers’ assessments of their family’s current financial situation weakened in August, but their assessments of their family’s financial situation going forward improved.

On balance, people have positive expectations of family financial situations, Guichard said.

She noted wage gains have helped, and she’s not expecting those wage gains to dry up anytime soon.

Companies want to hold onto their employees following the rehiring troubles they experienced during and after the pandemic, she said.

The Conference Board also surveys CEOs and found that the vast majority are planning to increase wages by more than 3% next year, Guichard said.