Consumer confidence dropped again in June as inflation stayed at decades high and continued to temper consumers’ economic outlook, which tumbled to the lowest level in nearly a decade. Though spending intentions for homes, cars, and major appliances held relatively steady, consumer spending will continue to face headwinds from further inflation and rate hikes.
The Consumer Confidence Index, reported by the Conference Board, fell 4.5 points from 103.2 to 98.7 in June, the lowest level since February 2021. The Present Situation Index marginally declined 0.3 points from 147.4 to 147.1, while the Expectation Situation Index sharply decreased 7.3 points from 73.7 to 66.4, the lowest since March 2013.
Consumers’ assessment of current business conditions deteriorated in June. The shares of respondents rating business conditions “good” fell by 0.2 percentage points to 19.6%, while those claiming business conditions “bad” rose by 1.3 percentage points to 23%. Meanwhile, consumers’ assessment of the labor market was mixed. The share of respondents reporting that jobs were “plentiful” decreased by 0.6 percentage points, while those saw jobs as “hard to get” declined by 0.8 percentage points.
Consumers were more pessimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 16.4% to 14.7%, while those expecting business conditions to deteriorate rose from 26.4% to 29.5%. Similarly, expectations of employment over the next six months were less favorable. The share of respondents expecting “more jobs” dropped by 1.2 percentage points to 16.3%, and those anticipating “fewer jobs” increased by 2.5 percentage points to 22%.
The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home stayed unchanged at 5.6% in June, the lowest level since September 2021. The share of respondents planning to buy a newly constructed home remained at 0.6%, while for those who planning to buy an existing home rose to 2.4%.