The Conference Board reported shopper sentiment lifted slightly in June, with its Consumer Confidence Index gaining 0.6 points to 91.2, up from a downwardly revised 90.6 in May, and inching toward the 100 index score that underlies the positive part of the scale.
Still, the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell by three points to 116.4. The Expectations Index, based on consumer outlook for income, business and labor market conditions six months out, rose by three points to 74.4%.
Consumer plans to buy big-ticket items over the next six months improved slightly, shifting from “no” to “maybe,” with the proportion saying “yes” rising modestly. At the same time, homebuying expectations rose on a six-month rolling basis. Consumers planning purchases six months ahead continued to rank furniture as the most desired item under consideration, followed by smartphones. However, expectations for both categories moderated in June. Spending plans for white goods and electronics eased or remained relatively unchanged on a six-month moving-average basis.
In the Present Situation Index, June sentiment on business conditions improved, while perceptions of current employment conditions declined, with the percentage of consumers saying jobs are hard to get rising to 22.5%, a five-and-a-half-year high, the Conference Board observed.
More specifically, one in five consumers said business conditions were good, up from 19.2% in May, while 16.5% said business conditions were bad, down from 16.7%. Some 24.9% of consumers said jobs were plentiful, up marginally from 24.8% in May, while 22.5% said jobs were hard to get, up from 19.8%.
The Expectations Index advanced in June, with two of three components, net expectations for business and expected household income six months from now, both improving. Net expectations for labor market conditions remained unchanged.
Consumers were more optimistic about future business conditions in June, the Conference Board pointed out. Overall, 19% of consumers expected business conditions to improve, up from 18.8% in May, and 20.3% expected business conditions to worsen, down from 23.2%. On net, 15.2% of consumers expected more jobs to be available, down from 16.6% in May, and 25.6% anticipated fewer jobs, down from 27%.
The consumer outlook for income prospects was more optimistic in June, with 20.8% of consumers expecting their incomes to grow, up from 19.2% in May, while 13.2% expected their incomes to decline, down from 14.5% in May.
Among age groups, confidence among consumers under age 35 remained the highest, even as confidence across all age groups trended downward on a six-month moving-average basis. By income, on a six-month moving average, confidence was mixed or little changed across all cohorts. By demographic designation, confidence fell the most for the Silent Generation and was stable or lower for others on a six-month moving-average basis.
Consumers’ average and median 12-month inflation expectations were less severe. Although a bit down from May’s 62.4%, the June reading of 61.5% still indicates that consumers expected higher interest rates over the next 12 months.
The consumer net view of family financial situations deteriorated for a third month, with virtually the same portion responding to the Conference Board poll saying conditions were good as those saying conditions were bad. Consumers’ views of future family finances were more optimistic. The proportion of consumers who said a recession hitting the United States during the next 12 months was somewhat likely rose, but, in general, recession expectations remained low.
Consumers planning more spending on services over the next six months shifted from “no” to “maybe” in June, but future spending plans on individual services were mixed, with restaurants/bars/take-out, streaming/internet/mobile services and beauty and personal care ranking as the top three spending targets.
Travel intentions within six months, as a category, slipped in June, with the decline predominantly driven by domestic travel plans. International travel intentions rose. Expected spending on hotels/motels and airfare/trains for personal travel was up moderately across segments.
Consumers’ write-in responses on factors influencing the economy continued to skew towards pessimism for June, the Conference Board asserted. References to prices and oil and gas were lower but remain elevated. Mentions of war, geopolitics, and conflict also eased, reflecting a softening of consumer concerns about the inflationary impacts of the war in the Middle East.
“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” said Dana Peterson, Conference Board chief economist. “Consumer appraisals of current business conditions were slightly more positive compared to last month. However, perceptions of the current labor market softened measurably as the percentage of consumers saying jobs were ‘hard to get’ rose to 22.5%, the highest level since January 2021. Moreover, consumers anticipate little change in the labor market six months from now. This was offset by improving expectations for business conditions and incomes.”
