Jun
US consumer confidence softened this month, driven by a subdued outlook for business conditions, the job market, and incomes. The Conference Board’s latest data, released on Tuesday, highlighted a decrease in its sentiment index to 100.4 from a downwardly revised 101.3 in May. This figure slightly missed economists’ expectations, who, according to a Bloomberg survey, had predicted a median reading of 100.
Declining Expectations and Present Optimism
The drop in confidence is primarily reflected in the expectations index for the next six months, which fell by nearly 2 points to 73. This contrasts with the present conditions gauge, which rose from a downwardly adjusted figure for May. Despite the lift in current conditions, the overall outlook remains cautious.
Confidence has wavered over the past few years as US consumers navigate persistent high living costs and elevated borrowing rates. Additionally, there has been a recent softening in the labor market. This month, only 12.5% of U.S. consumers anticipated an improvement in business conditions over the next half year. This marks the smallest share since 2011.
Dana Peterson, chief economist at The Conference Board, emphasized that confidence pulled back in June. However, it remained within the same narrow range that has held throughout the past two years. Strength in current labor market views continued to outweigh concerns about the future.” However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses.”
U.S. Consumer Spending Stalls in May Amid Economic Headwinds
In May, consumer spending in the United States experienced a lackluster period, as economic pressures weighed heavily on American households…
Inflation Concerns Ease but Costs Remain High
While concerns about inflation moderated in June, consumers still reported high grocery prices. The inflation data for May indicated a broad deceleration in price increases. This offered a slight reprieve from recent high inflation rates.
Additionally, consumers scaled back plans to purchase vehicles and major household appliances, often financed through loans. This retrenchment reflects cautious spending amid economic uncertainties. Despite this, there was a notable increase in the number of respondents planning vacations in the latter half of the year, signaling a rebound in domestic travel interest.
Labor Market Views Show Slight Improvement
Views on the current labor market improved marginally. About 38.1% of consumers indicated that jobs were “plentiful,” up from 37% in May, while fewer respondents reported that jobs were “hard to get.” This resulted in an increase in the differential between these two views—a metric closely watched by economists as a gauge of labor-market strength. This rise is the first in such a metric since the beginning of the year.
Looking Ahead
The future trajectory of consumer confidence will largely depend on developments in the labor market and inflation. As Dana Peterson highlighted, the balance between current labor market strength and concerns about future economic conditions will be crucial. Should significant weaknesses in employment emerge, US consumer sentiment could see further declines, potentially influencing broader economic activities such as spending and investment. For now, consumers remain cautiously optimistic, navigating through the complexities of a challenging economic landscape.
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