- Prior month 91.2 revised higher to 92.2
- Current month 90.8 versus 92.3 estimate
Dana M. Peterson, Chief Economist, The Conference Board:
“Consumer confidence moderated slightly in July, continuing a general downward trajectory that has been in place since late 2021. The Present Situation Index weakened for a third consecutive month, while the Expectations Index remained in negative territory.
“Consumers were less positive about current business conditions and, to a lesser extent, the labor market. Looking ahead, they see little improvement in business conditions over the next six months. Expectations for the labor market became slightly less negative, while income expectations eased but remained generally optimistic.”
Present Situation
- The Present Situation Index weakened in July as consumers became less positive about current economic conditions.
- The net assessment of business conditions fell 2.6 percentage points to +1.1%, barely remaining in positive territory.
- Perceptions of the labor market also softened, with the labor market differential slipping 0.7 percentage points to +3.1%.
- The decline was driven primarily by fewer consumers saying jobs are “plentiful,” while the share saying jobs are “hard to get” edged slightly lower.
Expectations
- The Expectations Index was unchanged in July, though the details were mixed.
- Expectations for business conditions deteriorated, with the net balance falling 1.5 percentage points to -3.3%.
- Income expectations softened modestly, declining 0.5 percentage points to +7.3%, but remained positive overall.
- Labor market expectations improved by 1.3 percentage points, though they remained in negative territory, signaling consumers still expect employment conditions to weaken over the next six months.
Inflation Expectations
The Conference Board did not provide a numerical figure for inflation expectations in this release. Instead, it stated:
- Average 12-month inflation expectations were less elevated in July.
- Median 12-month inflation expectations were also less elevated in July.
Looking at the chart, the levels have retraced the recent spike higher.
Quick Summary
- Consumer Confidence: 90.8 vs 92.2 prior (-1.4 points)
- Present Situation: 114.9 vs 118.5 prior (-3.6 points)
- Expectations: 74.7 vs 74.7 prior (unchanged, remains below the 80 level often associated with recession risk)
- Inflation Expectations: Both average and median declined, but no numerical values were provided in the release.
The Conference Board Consumer Confidence Index (CCI) measures how optimistic or pessimistic U.S. consumers are about current and future economic conditions. Since consumer spending makes up about two-thirds of the U.S. economy, the report is an important gauge of future economic activity.
What it measures:
- Current business and labor market conditions.
- Expectations for the economy, jobs, and income over the next six months.
- Overall consumer confidence.
Why it matters:
- Higher confidence: Suggests stronger consumer spending, supporting economic growth, stocks, Treasury yields, and potentially the U.S. dollar.
- Lower confidence: Signals consumers may pull back on spending, weighing on growth and increasing expectations for Fed rate cuts.
Key level to watch:
- An Expectations Index below 80 has historically been associated with an increased risk of recession.
Markets also pay close attention to the Expectations Index and the labor market differential (jobs plentiful vs. hard to get) for clues about the economy and future Federal Reserve policy.
This article was written by Greg Michalowski at investinglive.com.
