Consumer confidence edges up in July
Consumer confidence in July was mixed, with consumers feeling a bit more optimistic about the future but worried about present conditions.
The Conference Board’s Consumer Confidence rose in July to 100.3 from a downwardly revised 97.8 in June. The Present Situation Index — based on consumers' assessment of current business and labor market conditions — declined to 133.6 from 135.3 last month.
The Expectations Index — based on consumers' short-term outlook for income, business and labor market conditions — improved in July to 78.2. That's up from 72.8 in June.
July's write-in responses showed that elevated prices, especially for food and groceries, and inflation remain the key drivers of consumers' views of the economy, followed by U.S. political situation and the labor market.
"Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years," said Dana M. Peterson, chief economist at The Conference Board. "Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future, things that may not improve until next year."
Although expectations for future income improved slightly, consumers remained generally negative about business and employment conditions ahead, Peterson said. Meanwhile, consumers were a bit less positive about current labor and business conditions.
Smaller monthly job additions are weighing on consumers' assessment of current job availability, according to Peterson, as consumers' assessment of the current labor market situation, while still quite strong, declined to its lowest level since March 2021.
Average 12-month inflation expectations remained stable at 5.4% in July, compared to a peak of 7.9% in 2022. The share of consumers expecting higher interest rates over the next 12 months dropped for the second month in a row to 50.3% the lowest since February 2024.
Purchasing Plans
On a six-month moving average basis, purchasing plans for homes fell to a 12-year low. While buying plans for cars were little changed, buying plans for most big-ticket appliances increased slightly. Additionally, more consumers reported plans to buy a smartphone or laptop/PC in the next six months.
Planned spending on services appeared weaker in July 2024 than in July 2023. Consumers said they plan to spend less over the next six months on many discretionary items, including gambling, amusement parks and personal travel. The planned reduction in services spending was across the board, but consumers continued to prioritize non-discretionary expenditures like healthcare and motor vehicle services.
Other findings from the July report are below.
Present Situation
Consumers' assessment of current business conditions was slightly less positive in July.
- 18.8% of consumers said business conditions were "good," down slightly from 18.9% in June.
- 18.3% said business conditions were "bad," up from 18.1%.
Consumers' appraisal of the labor market deteriorated in July.
- 34.1% of consumers said jobs were "plentiful," down from 35.5% in June.
- 16.0% of consumers said jobs were "hard to get," up from 15.7%.
Expectations Six Months Hence
Consumers were more optimistic about the short-term business conditions outlook in July.
- 14.8% of consumers expected business conditions to improve, up from 13.2% in June.
- 16.7% expected business conditions to worsen, down from 17.6%.
Consumers' assessment of the short-term labor market outlook was less negative in July.
- 14.5% of consumers expected more jobs to be available, up from 13.1% in June.
- 16.7% anticipated fewer jobs, down from 18.3%.
Consumers' assessment of their short-term income prospects was less pessimistic in July.
- 15.6% of consumers expected their incomes to increase, down from 16.2% in June.
- 11.6% expected their incomes to decrease, also down from 12.3%.
Assessment of Family Finances and Recession Risk
- Consumers' assessment of their family's current financial situation weakened in July.
- Consumers' assessment of their family's financial situation going forward was less optimistic.
- Consumers' perceived likelihood of a U.S. recession over the next 12 months remains well below its 2023 peak.
The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers.
