by Survey indicates that spending on furniture continues to compete with family vacations, other big-ticket purchases
WASHINGTON — Consumer confidence fell this month as consumer plans to buy homes and cars have stalled, while spending on some other big-ticket purchases including vacations continues to rise.
The Consumer Confidence Index fell to 100.4 in June down from 101.3 in May. Meanwhile, the Present Situation Index that is based on consumers’ assessments of current business and labor market conditions, rose to 141.5, up from 140.8 in May. The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, dropped to 73 in June, down from 74.9 in May. This is the fifth consecutive month it has been below a threshold of 80, which officials say signals a recession.
“Confidence pulled back in June, but remained in the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future,” said Dana M. Peterson, chief economist at The Conference Board, adding that “if material weaknesses in the labor market appear, confidence could weaken as the year progresses.”
Peterson noted that the decline in confidence between May and June was largely centered on consumers between 35 and 54, while there was an improvement in confidence for those below 35 and those 55 and older in June.
“No clear pattern emerged in terms of income groups,” Peterson added. “On a six-month moving average basis, confidence continued to be highest among the youngest under 35 and the wealthiest (earning more than $100,000) consumers.”
The latest survey showed that buying plans for big-ticket appliances and smartphones rose slightly while fewer planned to buy a PC or laptop computer. In addition, the share of consumers planning a vacation in the next six months continued to rise and remains above the level a year ago, with more consumers planning to vacation in the U.S. than overseas and more people planning to travel by car versus by plane. However, the survey noted that the share of consumers planning to go on vacation is about 10 percentage points lower than pre-pandemic.
While fewer indicated they are concerned about a recession, and average 12-month inflation expectations fell slightly from 5.4% to 5.3%, write-in responses from consumers showed that elevated prices, including those for food and groceries, continue to impact their views on the economy, followed by the labor market and political situation in the U.S.
However, the share of those believing that the 2024 election would impact the economy was low compared to write-in responses in June 2016 and slightly higher than during the same period in 2020.
Consumers also were positive about the stock market. For example, 48.4% expect stock prices to increase in the year ahead compared to 23.5% expecting a decrease and 28.1% expecting no change. In addition, the share of consumers expecting higher interest rates over the next 12 months fell to 52.6%, the lowest level since February.
Other highlights of the report were as follows:
Of their Present Situation, or assessment of business conditions:
+ 19.6% of consumers said business conditions were good, down from 20.8% in May.
+ 17.7% said business conditions were bad, down from 18.4% in May.
+ 38.1% of consumers said jobs were plentiful, up from 37% in May.
+ 14.1% of consumers said jobs were hard to get, down from 14.3% in May.
Of their expectations of short-term business conditions six months from now:
+ 12.5% of consumers expected business conditions to improve, down from 13.7% in May.
+ 16.7% expected business conditions to worsen, down from 16.9% in May.
Regarding the short-term labor market outlook:
+ 12.6% of consumers expected more jobs to be available, down from 13.1% in May.
+ 17.3% anticipated fewer jobs, down from 18.8% in May.
Of their short-term income prospects:
+ 15.2% of consumers expected their incomes to increase, down from 17.7% in May.
+ 11.7% expected their incomes to drop, up from 11.5%.
