American consumer confidence showed a slight decline in June as expectations for the near-term future weakened, according to the latest report from the Conference Board.
The Consumer Confidence Index fell to 100.4 in June from 101.3 in May, a decrease that was less severe than anticipated by analysts. This index measures both current economic conditions and expectations for the next six months.
In June, the measure of Americans’ short-term expectations for income, business prospects, and the job market dropped to 73 from 74.9 in May, a reading that is closely watched as it can signal potential economic downturns when below 80. Conversely, consumers’ assessment of current conditions rose to 141.5 from 140.8 in May.
Dana Peterson, Chief Economist at the Conference Board, noted that while confidence pulled back in June, it remained within a consistent narrow range observed over the past two years. She emphasized that positive views on the current labor market continued to outweigh concerns about the future economic outlook.
Despite a slight uptick in the unemployment rate to 4% in May, the economy added a robust 272,000 jobs, indicating ongoing confidence among employers amid persistently high interest rates. This job growth was bolstered by increased consumer spending on travel, entertainment, and other services, reflected in near-record airport traffic over the Memorial Day weekend.
However, signs of labor market softening were evident, with April job postings reaching their lowest levels since 2021 and an increase in the number of Americans receiving unemployment benefits for seven consecutive weeks.
Looking ahead, Mary Daly, President of the San Francisco Fed, emphasized that while the labor market remained healthy, potential future slowing could lead to higher unemployment rates, warranting close monitoring.
Economic indicators generally portray the U.S. economy in a favorable light by historical standards, though there are indications of slowing growth. The economy notably decelerated to a 1.3% annual pace in the first quarter of the year, down from 3.4% in the final quarter of 2023, impacted by high interest rates.
Retail sales saw modest growth of 0.1% in May compared to April, as elevated prices of groceries and other essentials, coupled with high interest rates, tempered consumer spending. Retailers responded by offering discounts to attract cautious consumers increasingly mindful of inflation.
Consumer expectations of a recession in the next year eased in June after rising for the past two months, reflecting fluctuating sentiments amid evolving economic conditions, as reported by the Conference Board.
