The Conference Board, the think tank that provides economic insights, reported that its Consumer Confidence Index rose to 100.3 in July from a downwardly revised 97.8 in June.
It also reported that the Present Situation Index – based on consumers’ assessment of current business and labor market conditions – fell to 133.6 from 135.3 last month, while the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved in July to 78.2, up from 72.8 in June but still below 80 (the threshold that typically signals a coming recession).
“Confidence rose in July, but not enough to break the narrow range that has prevailed for the past two years,” said Dana M. Peterson, chief economist at The Conference Board. “While consumers remain relatively positive about the labor market, they still appear to be concerned about high prices and interest rates and uncertainty about the future — issues that may not improve until next year.”
Compared with last month, consumers were somewhat less pessimistic about the future. Future income expectations improved slightly, but consumers remained generally negative about future business and employment conditions. Meanwhile, consumers were slightly less positive about current business and employment conditions.
According to the report, lower monthly job creation may be weighing on consumers’ assessment of current job availability. While still fairly solid, consumers’ assessment of the current labor market situation declined to its lowest level since March 2021.
“In July, confidence improved among consumers under 35 and those over 55; only the 35-54 age group experienced a decline. On a six-month moving average basis, confidence remained at its highest level among consumers under 35. On a monthly basis, no clear pattern emerged in terms of income groups. On a six-month moving average basis, consumers earning more than $100,000 were the most confident, but the gap with other groups narrowed,” Peterson said.
Average 12-month inflation expectations held steady at 5.4% in July, compared with a peak of 7.9% reported in 2022. The share of consumers expecting higher interest rates over the next 12 months fell for a second straight month to 50.3%, the lowest level since February 2024. Meanwhile, consumers were positive about the stock market, with 49.1% expecting stock prices to rise over the year ahead (the highest share since March), 23.5% expecting a decline, and 27.4% expecting no change.
Peterson added: “The share of consumers expecting an imminent recession rose in July but remains well below the 2023 peak. Consumers’ assessments of their family’s financial situation, both now and over the next six months, were less positive. In fact, assessments of household finances have deteriorated steadily since the beginning of 2024.”
Written responses in July showed that high prices, especially for food and groceries, and inflation (the rate of change in prices), remain the main drivers of consumers’ views on the economy, followed by the U.S. political situation and the labor market. Mentions of the upcoming election increased, although the share of respondents who believe the 2024 election will impact the economy was lower than in written responses in July 2016.
For more details on the report, click here.
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