The Higgins Report: The Dog Days of August

By Joe Higgins, Quest 4 Quality

•     Consumer Confidence drops 11.3 points from July.

•     Housing prices rose 19 percent Y-O-Y in June, now up 40 percent since 2006.

•     America added 235,000 jobs in August vs. expectations of 733,000.

The Conference Board reported that consumer confidence in August fell by more than 11 points from July.

A drop of ten points or more is very concerning and indicates a significant shift in consumer attitudes, although any number on the index over 100 usually signals that there will be growth in the economy.

Confident consumers and the certainty of their financial situation will determine the future of America’s economic progress.  Confidence in your job security and ability to pay bills determines in a big way how much money you are willing to spend on goods and services.

 Consumers surveyed in August were facing two issues: First was the rise of the Delta variant and its swift acceleration throughout the population. The second was their apprehension about the high price of gasoline and the rising cost of food.

The survey also measures spending intentions and indicated that consumers’ desire to purchase cars, trucks and appliances pulled back slightly in August. It also found that many Americans canceled reservations for air travel, hotel stays and restaurants during the month.

Economists do not anticipate this drop in confidence to lead to a decline in consumer spending over the next three months. Considering the extraordinary amount of money in savings accounts currently held by Americans, I think the fourth quarter will show significant gains.


Home prices rose almost 19 percent Y-O-Y in June and are now 40 percent higher than they were during the 2006 housing boom, which was the impetus for the recession of 2008. This is the expected outcome in a perfect storm of extremely low-interest rates, a drastic shortage of available homes, and strong demand. It is not sustainable, nor is it good for our economy, and it may prove to be a disaster in the long term.

Where does this escalation in home pricing end? Can it go on indefinitely? All I can say is that it is a great time to be selling a house and a terrible time to be buying one.

What does this mean for home buyers? The supply of homes has increased each month this year, but inventories are still down 13 percent through July. Sales of homes have started to slow as assigned contracts fell in July, and prices generally lag sales by about six to seven months, so prices may finally reach an equilibrium between buyers and sellers sometime in the fourth quarter.


The virus is always a wildcard, especially with the emergence of a new variant called Mu. The research is still too early for any honest discussion of its impact, but scientists are worried that it may be resistant to the available vaccines.

Meanwhile, the news regarding the Delta variant remains very concerning as of this writing. In India and Western Europe, it followed a pattern of rapid escalation of cases, hospitalizations and deaths, and then quickly receded. We have seen this in some states out West and in the Northeast, but we need another month before experts can make any objective assessment of Delta’s future course.


Last week the Labor Department reported the worst month of job creation since February 2021, as COVID-19 infections made an oversized impact on our nascent economic recovery. America added 235,000 jobs in August vs. an expected 733,000 additions, and the unemployment rate dropped from 5.4 percent in July to 5.2 percent in August.

If I can find any good news in this report, it’s that the Bureau of Labor Statistics revised the July numbers higher, to 1.05 million new jobs, meaning that we added nearly 2 million jobs total in June and July. Even with the slowdown in August, it still gives us a healthy three months of job growth.

The August numbers reflect large and small businesses being more prudent about hiring due to the Delta variant’s spread. Conversely, job seekers were also hesitant to accept low wage, high contact positions for fear of the virus.

The August jobs report is critical because shows the impact of the surge of coronavirus cases on the labor market. The Federal Reserve will use this data set to direct their monetary policy. Fed Chair Jerome Powell said on Friday that tapering its $100 billion-plus monthly asset-buying program won’t happen until he sees a positive direction in the labor market.

The Bottom Line

This is no time to hit the panic button. The confidence and jobs numbers were a function of the growing threat of the Delta variant in late summer. Consumers understandably cut travel and dining, and thus reduced the need for new employees. The worsening public health outlook created a late-summer hiccup fpr the recovery, with restaurants and bars laying off 42,000 workers in August after adding 253,000 positions in July.

This is how our economy works today, and pandemics make conducting business hard. We thought we beat the virus in June, but it came back.

What does this mean for BrandSource members? Despite the macro environment, you will continue to win in the marketplace, because that is what BrandSource dealers do every day.

Joe Higgins is a 42-year veteran of GE and Whirlpool Corp. who brings his experience to bear as a business consultant, public speaker, AVB keynoter and YourSource News contributor. Visit his website, Quest 4 Quality with Joe, at