As consumers continue to see little relief from inflation—with the Consumer Price Index registering no change in May and the Fed again holding the line with no rate changes—confidence reversed course and fell slightly in June.
Consumer confidence decreased from 101.3 in May to 100.4 in June, according to the latest data from The Conference Board.
May’s reading was the first increase seen in three months, following a large drop in February, a small decrease in March and another significant drop in April. All of this comes after a strong start to 2024, with a two-year high in January.
“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as 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,” said Dana M. Peterson, chief economist at The Conference Board.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 141.5 from 140.8. For current business conditions, 19.6% of consumers said they were “good,” down from 20.8% last month. Meanwhile, 17.7% said business conditions were “bad,” down from 18.4% last month. For the labor market, 38.1% of consumers said jobs were “plentiful” (up from 37%), while 14.1% of consumers said jobs were “hard to get” (down from 14.3%).
The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—fell from 74.9 to 73 (1985 = 100).
“Consumers expressed mixed feelings this month: their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled,” Peterson continued. “Meanwhile, for the second month in a row, consumers were a bit less pessimistic about future labor market conditions. However, their expectations for both future income and business conditions weakened, weighing down the overall Expectations Index.”
As for consumers’ short-term business conditions outlook, 12.5% expect business conditions to improve (down from 13.7%), and 16.7% expect conditions to worsen (down from 16.9%). For the labor market outlook, 12.6% of consumers expect more jobs to be available (down from 13.1%), and 17.3% anticipate fewer jobs (down from 18.8%). For short-term income prospects, 15.2% of consumers expect their incomes to increase (down from 17.7%), and 11.7% expect a decrease (up from 11.5%).
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