Consumer confidence results fell short of estimates.
After rising in May, consumer confidence slipped again in June, according to the Conference Board.
The Conference Board’s June Consumer Confidence Index dropped 5.4 points in June to 93.0 – well below consensus estimates of 98.4. This follows a reading in May that saw consumer confidence spike 12.3 points in May on the easing of tariff tensions. May marked the first month since last November that the index rose, but now it is back on the downswing.
“Consumer confidence weakened in June, erasing almost half of May’s sharp gains,” Stephanie Guichard, senior economist, global indicators at The Conference Board, said. “The decline was broad-based across components, with consumers’ assessments of the present situation and their expectations for the future both contributing to the deterioration.”
The broader Consumer Confidence Index consists of two components – the Present Situation Index and the Expectations Index.
The Present Situation Index, which tracks consumers’ assessment of current business and labor market conditions, dropped 6.4 points in June, but it is still fairly high at 129.1. In June, 19% of consumers described business conditions as “good,” down from 21.4% in May, while 15.3% called business conditions “bad,” up from 13.7%.
Expectations drop
The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, plummeted fell 4.6 points to 69.0. That is concerning as it is significantly lower than the threshold of 80 that typically signals a recession ahead.
Specifically, 16.7% of consumers expected business conditions to improve, which was down from 19.9% in May. Also, 24.0% expected business conditions to get worse, down from 25.4% last month.
“The three components of the Expectations Index — business conditions, employment prospects, and future income — all weakened,” Guichard said. “Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly.”
Tariffs remain top concern
Based on write-in responses, tariffs continue to be the top concern among consumers, followed by inflation and high prices. Further, references to geopolitics and social unrest increased slightly from previous months but remained further down the list of concerns.
In addition, the share of consumers anticipating a recession over the next 12 months rose slightly in June.
However, consumers were more optimistic about the stock market, as 45.6% of consumers expect stock prices to increase over the next 12 months. That’s up from 37.6% in April. However, 57% believe interest rates will rise, which is the highest percentage since October 2023.
Also, consumers interested in buying cars remained at the highest level since last December, but purchasing plans for homes dropped. Further, buying plans for most appliances were up, but intentions to acquire electronics goods fell.
In addition, plans to purchase more services in the months ahead were down almost across the board – except dining out. Dining out remained the top choice among spending intentions in services.
Other services categories to see spending intentions rise in June were motor vehicle services, museum/historic sites, and fitness.
Plans to go on vacation were unchanged in June, but more consumers are planning to travel abroad and less planning to travel in the U.S.
