The Conference Board reported a weaker reading on its Consumer Confidence Index (CCI) for June. Consumers’ views of their current situation and their expectations for business conditions over the next six months have been quite negative. Indeed, approximately 86% of respondents anticipate that future prospects for job and income growth will be either the same or worse over the next six months. Ebbing energy prices did cause consumers to rein in their expectations for inflation over the next 12 months somewhat, but the rate of inflation they are anticipating remains close to 3-year highs.
The University of Michigan Consumer Sentiment Survey has tracked similarly to the Conference Board’s CCI as of late, with June preliminary data from the University of Michigan survey also revealing a decline in current and expected business conditions 6 months hence. When combined, the results from these separate surveys show consumers are feeling a significant strain from what continues to be a sluggish pace of economic recovery.
The CCI’s current situation component fell 1.7 percentage points to 37.6 in June. The share of respondents identifying business conditions as “bad” increased slightly from 37.2% to 38%, while the share reporting “good” business conditions was unchanged at 14.3%. The pace of new job creation slowed considerably in May, as the BLS reported a net gain of 54,000 jobs compared to an average of 200,000 per month earlier this year. This downward shift in new job creation might be due to temporary factors, but it is fostering a stubbornly pessimistic view of the labor market, with 43.8% of respondents identifying jobs as ‘hard to get’—a slight increase from May.
Consumer sentiment toward the housing sector also appeared to take a moderate turn for the worse in June. Only 3.7% of respondents plan to buy a home within the next 6 months—the lowest level since December 2010. Existing homes remain the focus of self-identified buyers, with 2% of respondents indicating that they plan to purchase a ‘lived-in’ house. Only 0.7% of respondents expressed a preference for a new home—the lowest reading since February.