US consumers’ confidence rose in August as their expectations for the future improved, according to The Conference Board, a business research group.
The group’s monthly Consumer Confidence Index — which measures US consumers’ assessment of current economic conditions and their outlook for the next six months — rose to 103.3 from 101.9 in July.
Short-term expectations for income, business, and the index measuring confidence about the job market also rose, to 82.5 from 81.1 last month.
The anticipated US Federal Reserve rate cut in September is likely fueling optimism, according to Bloomberg, but overall consumer confidence remains far below pre-pandemic levels due to higher costs of living and dwindling job growth.
“Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic,” said Dana Peterson, chief economist at The Conference Board.
For many Americans, saving for retirement is more straightforward than setting aside funds for emergencies. According to the Transamerica Center for Retirement Studies' latest report, "Retirement Outlook of the American Middle Class," middle-class individuals prioritize retirement planning, managing debt, and daily expenses. While emergency savings is also a priority, many people save for retirement without having sufficient emergency funds. The 24th annual Transamerica study surveyed 10,000 participants aged 18 and older, with over half having household incomes between $50,000 and $200,000.
By the end of 2023, the median emergency savings for middle-class Americans was $8,000. About one in seven reported having no emergency savings, and 25% were unsure of their savings amount. Those with household incomes between $50,000 and $99,000 had a median savings of $5,000, compared to $10,000 for those with household incomes between $100,000 and $199,000.
Over 40% of non-retired middle-class participants expect they will need to save $1 million or more for retirement. This expectation includes nearly a third of participants with household incomes from $50,000 to $99,000 and nearly half with incomes from $100,000 to $199,000. Almost 70% of surveyed middle-class individuals are confident they will retire comfortably, with more than a fifth being very confident, nearly half somewhat confident, 22% not too confident, and 9% not confident at all.
The discrepancy between retirement and emergency savings may be due to the widespread availability of employer-sponsored plans like 401(k)s. These plans offer automatic enrollment, contribution escalation, and employer matching, incentivizing future savings. Employers also provide educational resources and investment guidance, making retirement saving convenient. Three-quarters of respondents not yet retired were saving through employer-sponsored plans and/or independently. The median age at which participants began saving for retirement was 26.
However, the lack of emergency savings can leave Americans financially vulnerable. With a median emergency savings of just $8,000, many might struggle during prolonged unemployment or significant home repairs. Strengthening emergency savings can prevent individuals from tapping into their retirement funds prematurely, which could incur fees, taxes, and missed investment growth opportunities. One way to increase emergency savings is by setting up automatic transfers to a designated account. This task requires deliberate planning, as relying on memory to transfer money monthly may not be effective due to human nature, according to Catherine Collinson, CEO and president of the Transamerica Institute.
The high cost of caring for children and the elderly has forced women out of the workforce, devastated family finances, and left professional caretakers in low-wage jobs — all while slowing economic growth.
That families are suffering is not up for debate. As the economy emerges as a theme in this presidential election, the Democratic and Republican candidates have sketched out ideas for easing costs that reveal their divergent views about family.
On this topic, the two tickets have one main commonality: Both of the presidential candidates — and their running mates — have, at one point or another, backed an expanded child tax credit.
Vice President Kamala Harris, who accepted the Democratic Party’s nomination last week, has signaled that she plans to build on the ambitions of outgoing President Joe Biden’s administration, which sought to pour billions in taxpayer dollars into making child care and home care for elderly and disabled adults more affordable. She has not etched any of those plans into a formal policy platform. But in a speech earlier this month, she said her vision included raising the child tax credit.
Former President Donald Trump, the Republican, has declined to answer questions about how he would make child care more affordable, even though it was an issue he tackled during his own administration. His running mate, Sen. JD Vance of Ohio, has a long history of pushing policies that would encourage Americans to have families, floating ideas like giving parents votes for their children. Just this month, Vance said he wants to raise the child tax credit to $5,000. But Vance has opposed government spending on child care, arguing that many children benefit from having one parent at home as a caretaker.
The candidates’ care agendas could figure prominently into their appeal to suburban women in swing states, a coveted demographic seen as key to victory in November. Women provide two-thirds of unpaid care work — valued at $1 trillion annually — and are disproportionately impacted when families can’t find affordable care for their children or aging parents. And the cost of care is an urgent problem: Childcare prices are rising faster than inflation.
Kamala Harris: Increase the child tax credit
When Harris addressed the Democratic National Convention, she talked first about her own experience with child care. She was raised mostly by a single mother, Shyamala Gopalan, who worked long hours as a breast cancer researcher. Among the people who formed her family’s support network was “Mrs. Shelton, who ran the daycare below us and became a second mother.”
As vice president, Harris worked behind the scenes in Congress on Biden’s proposals to establish national paid family leave, make prekindergarten universal, and invest billions in child care so families wouldn’t pay more than 7% of their income. She announced, too, the administration’s actions to lower copays for families using federal child care vouchers, and to raise wages for Medicaid-funded home health aides. Before that, her track record as a senator included pressing for greater labor rights for domestic workers, including nannies and home health aides who may be vulnerable to exploitation.
This month at a community college in North Carolina, Harris outlined her campaign’s economic agenda, which includes raising the child tax credit to as much as $3,600 and giving families of newborns even more — $6,000 for the child’s first year.
“That is a vital — vital year of critical development of a child, and the costs can really add up, especially for young parents who need to buy diapers and clothes and a car seat and so much else,” she told the audience. Her running mate selection of Tim Walz, who established paid leave and a child tax credit as governor of Minnesota, has also buoyed optimism among supporters.
Donald Trump: Few specifics, but some past support
For voters grappling with the high cost of child care, Trump has offered little in the way of solutions. During the June presidential debate, CNN moderator Jake Tapper twice asked Trump what he would do to lower childcare costs. Both times, he failed to answer, instead pivoting to other topics. His campaign platform is similarly silent. It does tackle the cost of long-term care for the elderly, writing that Republicans would “support unpaid Family Caregivers through Tax Credits and reduced red tape.”
The silence marks a shift from his first campaign, when he pitched paid parental leave, though it was panned by critics because his proposal excluded fathers. When he reached the White House, the former president sought $1 billion for child care, plus a parental leave policy at the urging of his daughter and policy adviser, Ivanka Trump. Congress rejected both proposals, but Trump succeeded in doubling the child tax credit and establishing paid leave for federal employees.
In his 2019 State of the Union address, Trump said he was “proud to be the first president to include in my budget a plan for nationwide paid family leave so that every new parent has the chance to bond with their newborn child.”
This year, there are signs that his administration might not pursue the same agenda, including his selection of Vance as a running mate. In 2021, before he joined the Senate, Vance co-authored an op-ed for The Wall Street Journal opposing a proposal to invest billions in child care to make it more affordable for families. He and his co-author said expanding childcare subsidies would lead to “unhappier, unhealthier children” and that having fewer mothers contributing to the economy might be a worthwhile trade-off.
Vance has floated policies that would make it easier for a family to live off of a single income, making it possible for some parents to stay home while their partners work. Along with his embrace of policies he calls pro-family, he has tagged people who do not have or want children as “sociopaths.” He once derided Harris and other rising Democratic stars as “childless cat ladies,” even though Harris has two stepchildren — they call her “Momala” — and no cats.
Even without details about new care policies, Trump believes that families would ultimately get a better deal under his administration.
The Trump-Vance campaign has attacked Harris’ record on the economy and said the Biden administration’s policies have only made things tougher for families, pointing to recent inflation.
“Harris ... has proudly and repeatedly celebrated her role as Joe Biden’s co-pilot on Bidenomics,” said Karoline Leavitt, a campaign spokeswoman. “The basic necessities of food, gas, and housing are less affordable, unemployment is rising, and Kamala doesn’t seem to care.”