United States: Consumer confidence drops in June on less optimistic expectations
Consumer confidence decreased in June, contrasting the improvement recorded in the previous month. The Conference Board’s monthly consumer confidence index fell to 126.4, down from an upwardly revised 128.8 (previously reported: 128.0) in May. The print disappointed market analysts, who had expected the index to remain broadly stable at 128.1. Nevertheless, it remained well above the 100-point threshold that separates consumer optimism from pessimism.
The less optimistic sentiment in June was chiefly due to a less positive outlook on the economy. While consumers’ assessment of current conditions remained essentially unchanged from the 17-year high recorded in May—this signals that household consumption dynamics should remain robust in the last month of Q2 and heading into Q3—consumers’ expectations fell noticeably. Despite remaining positive, expectations came much closer to the threshold separating it from pessimistic sentiment. This signals that consumers do not expect the economy to run much faster in the coming months.
Looking at the details, consumers appeared to view current economic conditions in a more neutral way. The share of respondents who would characterize business conditions as either “good” or “bad” both declined. A similar dynamic was at play regarding the labor market. The labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get— decreased from 26.6 in May to 25.1 in June. While fewer respondents had a pessimistic view of the job market in June, the fraction of optimistic respondents declined by a larger margin.
As for short-term expectations, consumers’ view of the labor market improved; a higher percentage of respondents expected more jobs in coming months, while the share of pessimistic respondents declined. However, the opposite was true regarding the outlook for business conditions and consumers’ income prospects: The proportion of pessimistic respondents increased, while that of optimistic consumers decreased.