Consumer Confidence Declines Moderately
Consumer confidence decreased in July, following a larger decline in June, The Conference Board reported.
The Index now stands at 95.7 (1985=100), down 2.7 points from 98.4 in June. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 141.3 from 147.2 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—ticked down to 65.3 from 65.8.
“Consumer confidence fell for a third consecutive month in July,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The decrease was driven primarily by a decline in the Present Situation Index—a sign growth has slowed at the start of the third quarter. “
Franco noted the expectations index held relatively steady, but remained well below a 80, suggesting recession risks persist. “Concerns about inflation–rising gas and food prices, in particular–continued to weigh on consumers,” she said.
As the Fed raises interest rates to battle inflation, purchasing intentions for cars, homes and major appliances all pulled back further in July, ” Franco said. “Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”
The Conference Board said consumers’ appraisal of current business conditions was less favorable in July:
17.0% of consumers said business conditions were “good,” down from 19.5%.
24.0% of consumers said business conditions were “bad,” up from 22.8%.
Consumers’ assessment of the labor market also grew less optimistic:
50.1% of consumers said jobs were “plentiful,” down from 51.5%.
12.3% of consumers said jobs were “hard to get,” up from 11.6%. Looking ahead, consumers were mixed about short-term business conditions, with 14% of consumers expect business conditions will be better six months from now, down from 14.6% a month ago.