Consumer Confidence Show Signs of Life Following Bumpy Spring
The Conference Board, New York, said its Consumer Confidence Index increased in June, after virtually no change in May and sharp drops in March and April.
The Index now stands at 98.1, up from 85.9 in May. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved from 68.4 to 86.2. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – increased from 97.6 in May to 106.0 this month. The cutoff date for the preliminary results was June 18.
“Consumer Confidence partially rebounded in June but remains well below pre-pandemic levels,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “The re-opening of the economy and relative improvement in unemployment claims helped improve consumers’ assessment of current conditions, but the Present Situation Index suggests that economic conditions remain weak. Looking ahead, consumers are less pessimistic about the short-term outlook, but do not foresee a significant pickup in economic activity. Faced with an uncertain and uneven path to recovery, and a potential COVID-19 resurgence, it’s too soon to say that consumers have turned the corner and are ready to begin spending at pre-pandemic levels.”
“Consumer confidence surprised to the upside for June but the better-than-expected outturn only partially retraces recent steep declines,” said Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “The much better-than-expected jobs report for May perhaps lifted the outlook for the job market. The improved—or at least less bad—outlook may also be a reflection of shrinking COVID-19 case counts earlier in the month. The recent uptick could reverse that.”
The report said consumers’ appraisal of current conditions improved in June. The percentage of consumers claiming business conditions are “good” rose from 16.4 percent to 17.4 percent, while those claiming business conditions are “bad” decreased from 51.2 percent to 43.2 percent. Consumers’ assessment of the job market was also more favorable. The percentage of consumers saying jobs are “plentiful” increased from 16.5 percent to 20.8 percent, while those claiming jobs are “hard to get” decreased from 29.2 percent to 23.8 percent.
Consumers’ short-term outlook was less pessimistic in June. The Conference Board reported the percentage of consumers expecting business conditions will improve over the next six months was virtually unchanged at 42.6 percent, while those expecting business conditions will worsen decreased from 20.5 percent to 15.3 percent. Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead declined from 39.5 percent to 38.4 percent, however those anticipating fewer jobs in the months ahead also decreased, from 19.9 percent to 14.2 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase improved from 14.6 percent to 15.1 percent, while the proportion expecting a decrease declined from 15.4 percent to 14.4 percent.
