ANN ARBOR, Mich. — US consumer confidence teetered slightly in June as Americans grew a little warier about the future, new data released Tuesday showed.
The Conference Board’s latest consumer confidence index dipped to 100.4 in June from a downwardly revised level of 101.3 in May. June’s reading landed in line with what economists were expecting.
Measurements of Americans’ confidence are typically closely watched, as consumer spending accounts for nearly 70% of US economic activity. But that significance is even more heightened now with the US presidential election just months away.
“The details continue to demonstrate a hesitant, but not overly concerned, consumer,” Wells Fargo economists Shannon Seery Grein and Jeremiah Kohl wrote in an investor note on Tuesday.
Americans felt better about the labor market, which outweighed concerns about the future; however, consumers’ feelings on current business conditions cooled, noted Dana Peterson, chief economist of the Conference Board.
“However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses,” she said in a statement.
Americans felt different levels of confidence around different parts of the economy.
The present situations index ticked up to 141.5 (its highest level since March) from 140.8; however, the expectations index dropped to 73, marking the fifth consecutive month below 80, which the Conference Board considers as a threshold signaling a recession is ahead.
The expectations index has been at or above that potential recession threshold only six months since March 2022, when escalating inflation forced the Federal Reserve to start a historic rate-tightening campaign.
Inflation has cooled considerably during the past two years but is still above the central bank’s 2% target. Interest rates remain at a 23-year high and have helped to tamp down demand.
Tuesday’s consumer confidence index is a reflection of that, according to Ian Shepherdson, Pantheon Macroeconomics’ chief economist.
“In one line, (the index is) consistent with slowing consumption growth and a gently rising unemployment rate,” he wrote.
The Conference Board’s confidence index and the University of Michigan’s twice-a-month consumer sentiment index are two of the leading gauges of consumers’ attitudes toward the current and future strength of the economy.
Although the two indexes typically track similarly over time, the consumer confidence index is more influenced by employment and labor market conditions, while the Michigan sentiment index has a greater emphasis on household finances and the impact of inflation.
The Michigan index’s preliminary reading for June, released earlier this month, showed sentiment levels were at a seven-month low.
The latest, and highly critical, read on inflation will come Friday when the Commerce Department releases the Personal Consumption Expenditures price index data for May. The PCE index, which measured 2.7% in April, is the Fed’s preferred inflation gauge.
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