WASHINGTON (Reuters) – Consumer confidence in the US rose to almost 18-year highs in August as households continued to be optimistic on the labor market, pointing to strong consumer spending that will support the economy for the remainder of the year should.
FILE PHOTO: People are seen through the Roosevelt Field shopping center in Garden City, New York, on February 22, 201
The bright economic outlook, however, was somewhat clouded by other data On Tuesday, the trade balance deficit widened sharply in July as exports of agricultural products eased, suggesting that trade growth was in the third quarter could burden.
Confidence growth this month suggests that consumers are worried about Trump's protectionist trade policy, which has led to an escalation of a US-China trade war and tariffs with European Union, Canadian and European Union citizens Mexico.
Economists have warned that import tariffs will raise prices for ordinary Americans and make raw materials more expensive for some manufacturers. There have been reports of some companies either dismissing or planning workers due to import duties.
"This indicates some skepticism about trade, inflation or anything else that is upsetting the economy," said Jim Baird, chief investment officer at Plante Moran Financial Advisors, Kalamazoo, Michigan. "For the time being, consumers are staying resilient, which is a good sign for households over the coming months."
The Conference Board announced its Consumer Confidence Index rose 5.5 points to 133.4 this month Both the current business situation and labor market conditions continued to improve in August.
Many consumers said they were planning to buy a house or other large items in the coming months. The so-called labor market differential in the survey, which included data on respondents who believe that jobs are hard to find and those who see jobs in abundance, rose from 28.0 in the previous month to 30.0.
This measure correlates closely with the unemployment rate in the employment report of the Ministry of Labor. This is in line with the continued reduction in the labor market slump, which is close to full employment. Consumer short-term inflation expectations weakened this month from July onwards.
The results of the Conference Board survey contrast strongly with a University of Michigan survey showing that consumer sentiment dropped to an 11-month low in early August as households worry about rising inflation and reduce purchasing power.
Economists attributed the differences between the two surveys to their treatment of the labor market.
"The recent reading of the Conference Board Index was one of the more optimistic measures that could be linked to the labor market's emphasis on the survey, and many other labor market indicators have been strong lately."
Stocks on Wall Street was traded shallow on the day after the US-Mexico agreement on overhauling the North American Free Trade Agreement (NAFTA). Dollar .XXY fell to a four-week low against a basket of currencies. Prices for US Treasuries fell.
TRADE DEFICIT WIDENS
Separately, the Commerce Department said in its Progress Indicator Economic Report that the goods trade gap increased 6.3 percent to 72.2 billion last month. Exports of goods decreased 1.7 percent to $ 140.0 billion, impacted by a 6.7 percent decline in food, feed and beverage supplies.
This may be due to a continued reversal of soybean exports after farmers delivered the crop to China in April and May before Beijing's retaliatory tariffs came into force at the beginning of July.
Exports of capital and consumer goods also fell in the last month, although car exports increased. Imports of goods increased 0.9 percent to $ 212.2 billion in July, helped by imports of food, manufactured goods and capital goods.
There was also growth in motor vehicle imports, but consumer goods imports fell.
The government reported last month that trading in the second quarter contributed 1.06 percentage points to the 4.1 percent annualized economy growth.
Despite the expected decline in trade, economic growth in the July-September quarter is likely to remain solid.  The Commerce Department said on Tuesday that wholesale inventories rose 0.7% in July and inventories at retailers rose 0.4%, suggesting that inventories could boost gross domestic product this quarter.
In the second quarter, a complete camp dissolution occurred. As a result, inventories in the April-June quarter have deducted a full percentage point of GDP growth.
A third report showed that the S & P CoreLogic Case-Shiller aggregate index of 20 metropolitan areas rose 6.3% yoy in June, after rising 6.5% in May. House prices are driven by tight inventories.
The combination of higher real estate prices and rising mortgage rates makes buying a home unaffordable for some Americans, especially as wage growth eases. This has impacted the sale of homes and led to a slowdown in the real estate market.
"House prices will continue to rise this year and next, albeit at a relatively modest pace compared to recent years," said Brent Campbell, economist at Moody's Analytics in West Chester, Pennsylvania.
Reporting by Lucia Mutikani; Editing by Paul Simao