US' consumer confidence declines in June as economic fears mount

US’ consumer confidence index experienced a slight decline in June, dropping to 100.4 from 101.3 in May, according to The Conference Board (TCB). The present situation index, which assesses consumers' views on current business and labour market conditions, rose slightly to 141.5 from 140.8 in May.

Consumers’ opinions on the labour market showed improvement, with 38.1 per cent indicating that jobs were ‘plentiful,’ up from 37 per cent in May, and 14.1 per cent stating that jobs were ‘hard to get,’ a slight decrease from 14.3 per cent. However, views on business conditions were less positive; 19.6 per cent of consumers reported that business conditions were ‘good,’ down from 20.8 per cent in May, while those saying conditions were ‘bad’ decreased to 17.7 per cent from 18.4 per cent.

The expectations index, which gauges consumers' short-term outlook for income, business, and labour market conditions, fell to 73.0 from 74.9 in May. Notably, this index has been below the 80 threshold, which often signals a forthcoming recession, for five consecutive months. Consumers' expectations for the economy over the next six months showed a decline in optimism. Only 12.5 per cent expected business conditions to improve, down from 13.7 per cent in May, while 16.7 per cent anticipated conditions to worsen, a slight improvement from 16.9 per cent, as per TCB.

Average 12-month inflation expectations edged down from 5.4 per cent to 5.3 per cent. Write-in responses for June highlighted that elevated prices continue to affect consumers' perceptions of the economy, followed by concerns about the labour market and the US political situation. Interestingly, fewer respondents this year believe the 2024 election will significantly impact the economy compared to similar write-ins from June 2016, though the number is slightly higher than in 2020.

Consumers' outlook on the labour market over the next six months was slightly less negative. Those expecting more jobs to be available decreased to 12.6 per cent from 13.1 per cent in May, while those anticipating fewer jobs fell to 17.3 per cent from 18.8 per cent.

Consumers’ expectations for their short-term income prospects showed a downturn in June. The percentage of consumers expecting an increase in their incomes dropped to 15.2 per cent from 17.7 per cent in May, while those expecting their incomes to decrease rose slightly to 11.7 per cent from 11.5 per cent.

“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labour market views continued to outweigh concerns about the future. However, if material weaknesses in the labour market appear, Confidence could weaken as the year progresses,” said Dana M Peterson, chief economist at The Conference Board.

Fibre2Fashion News Desk (DP)