The Conference Board's Consumer Confidence Index® retreated in June, paring back nearly half of May's gains. The index fell 5.4 points to 93.0 this month, marking its sixth monthly decline in the past seven months. The latest reading is the second lowest level in over four years, behind only April of this year (85.7) and was worse than the forecast of 99.4.
The Present Situation Index, which is based on consumers' assessment of current business and labor market conditions, decreased from 135.5 in May to 129.1 in June. Meanwhile, the Expectations Index, which is based on consumers' short-term outlook for income, business, and labor market conditions, increased from 73.6 in May to 69.0. Note that a level of 80 or below for the Expectations Index historically signals a recession within the next year.
“Consumer confidence weakened in June, erasing almost half of May’s sharp gains,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was broad-based across components, with consumers’ assessments of the present situation and their expectations for the future both contributing to the deterioration. Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory, in line with the still-solid labor market. The three components of the Expectations Index—business conditions, employment prospects, and future income—all weakened. Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly.”
Guichard added: “Consumers’ write-in responses revealed little change since May in the top issues impacting their views of the economy. Tariffs remained on top of consumers’ minds and were frequently associated with concerns about their negative impacts on the economy and prices. Inflation and high prices were another important concern cited by consumers in June. However, there were a few more mentions of easing inflation compared to last month. This is in line with a cooling in consumers’ average 12-month inflation expectations to 6.0% (down from 6.4% in May and 7% in April). References to geopolitics and social unrest increased slightly from previous months but remained much lower on the list of topics affecting consumers’ views.”
Background on the Consumer Confidence Index
The Conference Board Consumer Confidence Index measures the consumers attitudes and confidence in the economy, business conditions, and labor market, with higher readings indicating higher optimism. The general assumption is that when consumers are more optimistic they will spend more and stimulate economic growth. However, if consumers are pessimistic then spending will decline and the economy may slow down. The index is based on a 5 question survey, with 2 questions related to present conditions and 3 questions related to future expectations. The survey began in 1967 and was conducted every two months but changed to monthly reporting in 1977, which is where our data begins.
