After a negative report in late May, which came on the heels of three months of gains, nonprofit research firm The Conference Board’s Consumer Confidence Index, which measures American opinions of current economic conditions and their outlook for the next six months, inched up by 0.6 points to 91.2 in June, up from a downwardly revised 90.6 in May.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell by three points to 116.4. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—rose by three points to 74.4. The survey period for this month’s preliminary results was June 1-23, encompassing an extension of the U.S.-Iran ceasefire agreement.
Consumers’ average and median 12-month inflation expectations were less elevated. While down somewhat from May (62.4%), most consumers (61.5%) in June still expected higher interest rates over the next 12 months.
Recently, in his first Federal Open Market Committee (FOMC) meeting as Fed Chair, Kevin Warsh held rates steady and announced the formation of five task forces to review the Fed’s operations. He called the committee’s commitment to price stability unambiguous and unanimous.
Equity market volatility, notwithstanding, the second half of the June survey period included an extension of the U.S.-Iran ceasefire and likely influenced consumer expectations of even higher stock prices a year from now.
Consumers’ plans to buy big-ticket items over the next six months improved slightly, shifting from “no” to “maybe,” and the proportion saying “yes” picked up modestly. Buying plans for autos continued rising on a six-month moving average basis in June. Home-buying expectations also rose on a six-month rolling basis.
That aligns with other data and surveys that have found more optimism specifically around homebuying, indicating that consumers are feeling better about the housing market despite headwinds.
The National Association of Realtors® (NAR) Chief Economist Lawrence Yun noted that mortgage rates can change even if the Federal Reserve’s policy does not change.
“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” said Dana M Peterson, chief economist, The Conference Board. “However, perceptions of the current labor market softened measurably as the percentage of consumers saying jobs were ‘hard to get’ rose to 22.5%, the highest level since January 2021 (22.8%). Moreover, consumers anticipate little change in the labor market six months from now.”
A report later this week from the Census Bureau will be closely watched, as economists parse out a labor market bolstered by AI investments but still facing more foundational struggles.
Among age groups, confidence for consumers under age 35 remained the highest, but confidence for all age groups trended downward on a six-month moving average basis, according to the report. By income, on a six-month moving average basis, confidence was mixed or little changed across all categories. By generation, confidence fell the most for the Silent Generation but was stable or lower for others on a six-month moving average basis. By political affiliation, confidence among Independents and Democrats rose while Republicans were somewhat less positive on a month-over-month basis.
