American consumers lost some confidence in June as expectations over the near-term future fell again.
The Conference Board, a business research group, said Tuesday that its consumer confidence index fell in June to 100.4 from 101.3 in May. The index’s decline was not quite as bad as analysts were expecting.
The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months.
The measure of Americans’ short-term expectations for income, business and the job market fell to 73 from 74.9 in May. A reading under 80 can signal a potential recession in the near future.
Consumers’ view of current conditions rose in June to 141.5, up from 140.8 in May.
“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,” said Dana Peterson, the Conference Board’s chief economist.
Even though the unemployment rate ticked up to 4% in May, America’s employers added a strong 272,000 jobs last month, a sign that companies are still confident enough in the economy to keep hiring despite persistently high interest rates.
Last month’s sizable job gain was propelled by consumer spending on travel, entertainment and other services. U.S. airports reported near-record traffic over the Memorial Day weekend.
Most economic indicators show the U.S. economy in good shape by historical standards, though there have been some signs that growth is slowing.
The nation’s economy slowed sharply in the first quarter to a 1.3% annual pace in the face of high interest rates, down from a brisk 3.4% growth rate in the final three months of 2023.
Retail sales inched up just 0.1% in May from April as still high prices on groceries and other necessities and high interest rates curbed spending.
More cautious spending in the face of inflation has some big retailers offering discounts this summer. The latest quarterly earnings reported by big retailers show that while consumers have not stopped spending, they are becoming more price-conscious and choosy.
Consumer expectations of a recession in the next year pulled back in June after rising the previous two months, the Conference Board said.
Consumer confidence in the United States took a hit in the month of June, as concerns about near-term prospects among Americans led to a decrease in overall sentiment. This decline in consumer confidence is significant, as it can have far-reaching effects on the economy and overall consumer spending habits.
According to the Conference Board, a non-profit research organization that tracks consumer confidence, the Consumer Confidence Index fell to 120.0 in June, down from 128.8 in May. This drop was unexpected, as economists had predicted a slight increase in consumer confidence for the month.
So, what exactly is causing this decrease in consumer confidence? One major factor is the uncertainty surrounding the ongoing COVID-19 pandemic. As cases continue to rise in certain parts of the country and new variants of the virus emerge, many Americans are worried about the potential impact on their health and the economy. This uncertainty has led to a more cautious approach to spending, as consumers are unsure about what the future holds.
Another factor contributing to the decrease in consumer confidence is inflation. Prices for goods and services have been on the rise in recent months, with some items experiencing significant price increases. This has put a strain on many households, as they are forced to spend more on everyday essentials. As a result, consumers are feeling less optimistic about their financial situation and are cutting back on discretionary spending.
Additionally, concerns about the labor market are also weighing on consumer confidence. While the economy has been adding jobs at a steady pace, there are still millions of Americans who remain unemployed or underemployed. This has created a sense of insecurity among workers, as they worry about job stability and future prospects.
The decrease in consumer confidence is concerning for several reasons. Consumer spending makes up a significant portion of the U.S. economy, so when consumers are feeling less confident, they are less likely to spend money on goods and services. This can have a ripple effect on businesses, leading to lower sales and potentially job losses.
In order to boost consumer confidence, policymakers will need to address the underlying issues that are causing Americans to feel uncertain about the future. This may involve implementing policies to control inflation, providing support for workers who are struggling to find employment, and continuing efforts to combat the spread of COVID-19.
Overall, the decrease in consumer confidence in June is a reminder of the fragility of the economy and the importance of addressing the concerns of everyday Americans. By taking steps to address these issues, policymakers can help restore confidence and ensure a more stable economic future for all.
