The Conference Board reported today that consumer confidence fell in June to 58.5, its lowest level since November 2010. The Consumer Confidence Index for May was a revised 61.7, and it has steadily declined since its recent peak of 72.0 in February.
Indicators for the current economic environment and the short-term outlook declined, with job market expectations over the next six-months weakening. Inflation expectations, however, improved, most likely due to lower (but still high) gasoline prices.
Anxieties about the economy are leading to reduced spending on big-ticket items, with fewer respondents planning to purchase autos, homes, or appliances in June versus May. Confidence fell in every region except the Mid-Atlantic, with older and high-income respondents more likely to express pessimism.
In light of these findings, Lynn Franco, the Director of the Consumer Research Center for the Conference Board, said, “Given the combination of uneasiness about the economic outlook and future earnings, consumers are likely to continue weighing their spending decisions quite carefully.”
Looking ahead, consumer confidence will hinge on improvements in the overall economy, energy costs, and/or the labor market. It the economy strengthens somewhat in the second half of this year, as I expect, consumers should become more optimistic.
Chad Moutray is chief economist, National Association of Manufacturers.
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