US Consumer Confidence Falls in June Amid Economic Concerns

A hiring sign at the Fashion Center at Pentagon City shopping mall in Arlington, Va., on Jan 3, 2024. (Madalina Vasiliu/The Epoch Times)

Consumer confidence among Americans fell this month, with near-term expectations about the economy and income decreasing as well, according to a survey.

The Conference Board’s Consumer Confidence Index declined from 101.3 in May to 100.4 in June, with the most marked decline seen among consumers in the 35–54 age group. By contrast, consumers below the age of 35 and above 54 showed improved confidence this month.

“On a six-month moving average basis, confidence continued to be highest among the youngest (under 35) and wealthiest (making over $100K) consumers,” Dana M. Peterson, chief economist at The Conference Board, said in a statement.

While respondents’ views about the present economic situation improved slightly, their expectations of future income and business conditions weakened.

The Expectations Index, which takes into account consumers’ short-term outlook for income, business, and labor market conditions, also declined in June and remained below the 80 level for the fifth consecutive month. A value of less than 80 usually signals a recession.

Compared to May, consumers were less concerned about the United States entering a recession, Ms. Peterson stated. However, expectations of their family’s financial situation over the next six months were less positive.

Elevated prices, especially for groceries and food, were the top factors impacting consumer views about the state of the economy. The labor market came in second, followed by the political situation in the country.

Contrasting Outlook

While The Conference Board’s report shows Americans worried about their near-term prospects, a June 10 report by the Federal Reserve Bank of New York showed a contrasting outlook.

U.S. households were found to have become “more optimistic” about their future financial situation.

“Perceptions about households’ current financial situations improved, with more respondents reporting being better off than a year ago and fewer respondents reporting being worse off,” the Fed report stated.

“Year-ahead expectations also improved, with a smaller share of respondents expecting to be worse off and a larger share of respondents expecting to be better off a year from now.”

According to The Conference Board, people’s spending plans over the next six months were mixed. Consumer interest in booking a vacation and buying smartphones or other big-ticket appliances rose slightly.

Fewer people planned to purchase a laptop or PC. Buying plans for cars stalled. While the intention to buy homes was mostly unchanged, it remained at a “historically low” level in June.

Inflation, Interest Rates

The declining consumer confidence as measured by The Conference Board comes as Americans struggle with elevated inflation and interest rates.

Annual inflation has remained at or above 3 percent for every single month since June 2023. Meanwhile, the Federal Reserve has kept interest rates in the range of 5.25 to 5.5 percent since July last year.

Wealth management specialist Peter Tarr pointed out in a June 25 post on social media platform X that the confidence index was at its lowest level since 2011.

“Government officials and [the] Fed are telling people they’re wealthier and better off than ever. People are saying the complete opposite. Regardless, this is a consumer call for interest rate cuts,” he wrote.

“The reality is that the overall numbers are high but the economy has bifurcated. The wealthy are better than ever on account of rising asset prices & high rates on cash. Those without are being crushed by higher costs & borrowing rates. That is NOT a good economy.”

The Fed may also raise interest rates higher, thus negatively affecting demand. Late last month, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said during a Barclay’s event in London that he was not “ruling out potential interest-rate increases from here.”

While keeping interest rates at current levels is a more likely outcome, “If we get surprised by the data, then we would do what we need to do ... for the committee to get inflation all the way back down to our 2 percent,” he said.