In July, the Conference Board Consumer Confidence Index decreased by 1.4 points to 90.8, down from an upwardly revised 92.2 in June, as the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell by 3.6 points to 114.9, its third consecutive monthly decline.
Home buying and auto purchasing expectations continued an upward trend on a six-month moving average basis. Among planned purchases of durable goods within six months, furniture and smartphones remained most likely. Spending plans for TV sets, refrigerators and washing machines gained on a six-month moving average basis.
In the Present Situation Index, 18.9% of consumers said business conditions were good, down from 20.2% in June, while 17.8% said business conditions were bad, up from 16.5%.
Net views of current business conditions, the share saying conditions are good versus bad, fell by 2.6 points to plus 1.1%, barely remaining in positive territory. Perceptions of current employment conditions declined, driven by fewer consumers reporting that jobs are plentiful, although those saying jobs are hard to get dipped slightly over the month as well. So, 24.6% of consumers said jobs were plentiful, down from 25.5% in June, while 21.5% said jobs were hard to get, down slightly from 21.7%.
Net expectations for labor market conditions six months out improved slightly but remained in negative territory. In their economic expectations a half year from now, 17.8% of consumers anticipated improving business conditions, down from 18.9% in June, while 21.1% expected business conditions to worsen, up from 20.7% month over month. As for the labor market, 16.7% of consumers polled in July expected more jobs to become available, up from 15.6% in June, while 25.3% anticipated fewer jobs, down from 25.5%.
In looking ahead, 20.3% of consumers expected their incomes to increase, down from 20.7% in June and 13% expected their incomes to decline, up from 12.9%. Consumers’ average and median 12-month inflation expectations were middling in July as 61.3% of consumers still expected higher interest rates over the next 12 months, unchanged from June. On the whole, consumers still expected higher stock prices a year from now.
Consumer net views of their Family’s Current Financial Situation improved after slipping for three straight months. Views of their Family’s Future Financial Situation were healthy but somewhat less optimistic in July versus June, the Conference Board maintained. Meanwhile, the share of consumers who said they expect a recession in the U.S. over the next 12 months is somewhat likely to continue rising, the organization added, but overall recession expectations remained low, with those saying recession is very likely declining.
Consumers planned to spend more on services over the next six months, the Conference Board data indicated. Among all service categories, restaurants/bars/take-out, streaming/internet/mobile services and beauty and personal care remained spending targets. Also, consumers anticipated spending more on activities such as movies, hotels for personal travel, airfare and amusement parks, as well as museums and historical sites. Travel intentions within six months perked up in July after easing for most of this year. Domestic travel plans recovered while foreign travel plans lagged.
On a six-month moving average basis, confidence was highest for Gen Z and Millennials, while it fell the most for the Silent Generation. Confidence was highest for consumers under 35 years of age, but confidence among those aged 35-54 showed the greatest improvement. By income, confidence was mixed, but higher-income cohorts were the more optimistic.
Consumers’ write-in responses on the economy continued to be largely pessimistic in July. References to prices and oil and gas eased in frequency but remain elevated. Comments about food and grocery prices rose. Mentions of war, geopolitics and conflict eased, but, as the fighting in the Middle East has reaccelerated recently, an increase could occur, the Conference Board pointed out. References to jobs and unemployment picked up slightly.
“Consumer confidence moderated slightly in July, continuing a general downward sloping trajectory since late 2021,” said Dana Peterson, Conference Board chief economist, in announcing the trends in consumer sentiment. “The Present Situation Index was less positive for a third consecutive month, while the Expectations Index remained in negative territory. Consumer appraisals of current business conditions and, to a lesser extent, perceptions of the current labor market both softened. Looking ahead, consumers anticipate little improvement in business conditions over the next six months, but expectations for the labor market were slightly less negative. Expectations for household incomes moderated but remained optimistic overall.”
