The Higgins Report: Economy Firing on All Cylinders

And durable goods are making a comeback

By Joe Higgins, Quest 4 Quality

  • Gross domestic product for Q2 2023 came in at +2.4% and beat analysts’ expectations of +1.8%
  • Consumer confidence hit a two-year high of 117 in July
  • The Federal Reserve raised interest rates a quarter of a point last month, which may well have been the final increase this year

The stories I could tell you about America’s financial numbers in July would dazzle you.

Consumer Confidence from the Conference Board hit a two-year high of 117.0. Retail sales were up an outstanding 1.5% in June, and appliance, electronics and furniture stores were a big part of that increase. The Federal Reserve raised interest rates for hopefully the last time. Jobless claims came in at 221,000, the lowest since January. And last but most important, gross domestic product (GDP) came in at 2.4%, above expectations of 1.8%.

See: Appliance, Furniture Sales Up in June

Consumer spending was the most extensive driver of last month’s rise in GDP, which comprises goods like washers and services like travel. Within services, the components that registered the most significant increases were medical care and housing. Within goods, most spending was on new and used cars.

Last year our GDP was $26 trillion, with $18 trillion for services and $8 trillion for goods. BrandSource members sell goods, and because consumers couldn’t travel, dine out or attend ball games in late 2020 and 2021, they shifted about $6 trillion from services to goods, which is why business was so good. 

In 2023 consumers ramped up their spending on services — increasing travel, staying at hotels and dining out. That is why our business has been a little soft. However, there are indications now that this is cycling back, as durable goods orders were up 4.7% in June.

Let me put this in perspective: For the past 17 months, the Fed has been trying to cool down the economy by increasing interest rates by 525 basis points. After all that time and the fastest rise in rates in U.S. history, the economy should be in the tank. Instead, we enjoy the lowest unemployment levels in 50 years and rising GDP and the highest confidence and spending levels in two years. 

Consumer Confidence 

The July 2023 Consumer Confidence Index from the Conference Board reached 117.0, the highest reading in 24 months. This is a significant increase from May when the number was 102.5, and up from June, when it was 110.1. Confidence in your job and paycheck is a strong indicator of future spending in the economy. A 10-point rise is significant, but a 15-point increase since May indicates consumers are eager to spend their cash. 

Also in this report is the Expectations Index, which measures how people feel about their future income, jobs and business expansion. That index increased to 88.2 from a reading in June of 80. Traditionally any number above 80 would mean that consumers are not expecting a recession to hit the economy in the next twelve months.

The Conference Board’s index looks mainly at the availability of labor. Given that unemployment is at 3.6% today, at or near the lowest rate in 50 years, consumers are very upbeat about access to jobs. There is a lot of positivity in the economy today, which is reflected in these confidence numbers. Other indicators pushing up confidence are a stock market that’s up double digits, rising new home sales and that 2.4% spike in Q2 GDP.

From a historical perspective, consumer confidence fell to an all-time low of 34.6 in December 2008. The confidence index tells you two painful things about an approaching recession: It indicates how many Americas will lose their jobs and how long it will last. During the 2008 recession, unemployment hit 10% and lasted 18 months. Last month’s reading of 117 dramatically reduces the risk of a 2023 recession. 

The Bottom Line

Last week Fed Chair Jerome Powell and his Central Bank staff announced that “Given the resilience of the economy recently, we are no longer forecasting a recession.”

Just look at the data — it tells us there are positive signs in the economy. Inflation has receded from 9.1% last summer to 3% today, the lowest in two years. Consumers are still very active, as retail sales were up 1.5% in July, and appliance, furniture and electronics stores were among those drivers. The economy created 209,000 jobs and looks to continue that trend until year’s end. 

Lastly, the stock market doesn’t tell us where the economy is today; instead, it looks toward the future, and it is currently in a bull market territory this year. The S&P 500 is up 17.5%, and the Nasdaq is up even more at 35.7%. 

So, as they say, follow the money!

Joe Higgins is a 46-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at

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