Ambiguity Takes Hold of U.S. Consumers in July

The Conference Board Consumer Confidence Index increased in July to 100.3 (1985=100), up from a downwardly revised 97.8 in June.

“Confidence increased in July, but not enough to break out of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board.

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 133.6 from 135.3 last month. Meanwhile, the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, improved in July to 78.2. This is an increase from 72.8 in June but still below 80, the threshold that generally signals an impending recession. The cutoff date for the preliminary results was July 22, 2024, The Conference Board explains.

“Although consumers remain relatively positive about the labor market, they still seem concerned about high prices and interest rates, and uncertainty about the future—things that may not improve until next year,” Peterson added.

Compared to last month, consumers were somewhat less pessimistic about the future, and expectations regarding future income improved slightly. However, consumers remained generally negative about business and employment conditions, the statement explains.

Additionally, consumers were a bit less positive about the current labor market and business conditions. Potentially, smaller monthly job additions are weighing on consumers’ assessment of current job availability: although still quite strong, consumers’ assessment of the current labor situation fell to its lowest level since March 2021.

In July, confidence improved among consumers under 35 and those 55 and older; only the 35 to 54 age group saw a decrease. On a six-month moving average basis, confidence remained highest among consumers under 35.

Regarding the prediction of a recession, Peterson added that it remains well below the peak of 2023. Consumers’ assessments of their family’s financial situation, both currently and in the next six months, were less positive. In fact, evaluations of family finances have continuously worsened since the beginning of 2024.

• USA