By Kerry Smith
Attitudes about current conditions were relatively unchanged, but attitudes about the future fell more based on fears over inflation and the cost of gas, food, etc.
BOSTON – American consumers’ attitudes fell a bit more in June after a decline in May, the second month in a row for a decline.
The Index fell to 98.7 – down 4.5 points from 103.2 in May – and is at its lowest level since February 2021.
The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined marginally to 147.1 from 147.4 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased sharply to 66.4 from 73.7, hitting its lowest level since March 2013.
“The Expectations Index continued its recent downward trajectory – falling to its lowest point in nearly a decade,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by year-end.”
Consumers’ appraisal of current business conditions was less favorable in June.
- 19.6% of consumers said business conditions were “good,” down slightly from 19.8%.
- 23.0% of consumers said business conditions were “bad,” up from 21.7%.
Consumers’ assessment of the labor market was mixed.
- 51.3% of consumers said jobs were “plentiful,” down from 51.9%.
- Conversely, 11.6% of consumers said jobs were “hard to get,” down from 12.4%.
Expectations six months in the future
Consumers grew more pessimistic about the short-term business conditions outlook in June.
- 14.7% of consumers expect business conditions will improve, down from 16.4%.
- 29.5% expect business conditions to worsen, up from 26.4%.
Consumers were more pessimistic about the short-term labor market outlook.
- 16.3% of consumers expect more jobs to be available, down from 17.5%.
- 22.0% anticipate fewer jobs, up from 19.5%.
Consumers were also more pessimistic about their short-term financial prospects.
- 15.9% of consumers expect their incomes to increase, down from 17.9%.
- 15.2% expect their incomes will decrease, up from 14.5%.
“Purchasing intentions for cars, homes, and major appliances held relatively steady – but intentions have cooled since the start of the year and this trend is likely to continue as the Fed aggressively raises interest rates to tame inflation,” says Franco. “Meanwhile, vacation plans softened further as rising prices took their toll. Looking ahead over the next six months, consumer spending and economic growth are likely to continue facing strong headwinds from further inflation and rate hikes.”