American Consumer Confidence Jumps with Relief for Family Finances in June

The Conference Board said Consumer Confidence ln June Jumped to 109.7 (consensus 103.8) from an upwardly revised 102.5 (from 102.3) in May. In the same period a year ago, the index stood at 98.4. Noticeably sentiment has become more optimistic with the uptick in consumer confidence from a pickup in views about current conditions and a brighter outlook for consumers’ family finances. It appears the fear around bank failures and politics in the United States has numbed respondents.

The expectations Index remained below 80.0 for the 15th month out of the last 16, which serves as a concerning signal about future growth.

American consumers’ short-term outlook shows a bounce back after they had become became decidedly gloomy, becoming considerably less upbeat about their short-term income prospects. That was scuppering plans to buy homes, autos, and major appliances. We will see if the change is a relief or meaningful.

The Conference Board

US Consumer Confidence June 2023

US CB Consumer Confidence June: 109.7 (est 104.1; prev R 102.5)

  • The Present Situation Index increased to 155.3 from 148.9.
  • The Expectations Index dropped to 79.3 from 71.5
  • 12-month inflation expectations remained essentially unchanged at 6.2%.

“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board. “Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next 6 to 12 months.”

“Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Indeed, the spread between consumers saying jobs are ‘plentiful’ versus ‘not so plentiful’ widened, indicating upbeat feelings about a labor market that continues to outperform. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”

      “Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Indeed, the spread between consumers saying jobs are ‘plentiful’ versus ‘not so plentiful’ widened, indicating upbeat feelings about a labor market that continues to outperform. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”

      Family’s Current Financial Situation

      Consumers’ assessments of their current situation reflect largely healthy family finances in June.

      • 28.5% of consumers say their current family financial situation is “good,” down slightly from 29.2% in May.
      • 18.2% say their current family finances are “bad,” down from 19.5%.

      “While income expectations ticked down slightly in June, new questions included in this month’s release found a notably brighter outlook for consumers’ family finances: Around 30 percent expect their family’s financial situation to be ‘better’ in the next six months, compared to less than 14 percent expecting it to be ‘worse.’ This might reflect consumers’ belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead. Indeed, the 12-month forward inflation expectations gauge fell to 6 percent in June, the lowest reading since December 2020.”

      Family’s Expected Financial Situation, Six Months Hence

      Consumers’ expectations of their family finances in six months’ time reflect a relatively buoyant outlook.

      • 30.3% of consumers expect their family finances to be “better,” up from 28.9% in May.
      • 13.7 % expect their family finances to be “worse,” down from 14.9%.
      • This positive outlook might reflect consumers’ expectation that labor market conditions will remain favorable and that there may be further declines in inflation ahead.

      “Although the Expectations Index remained a hair below the threshold signaling recession ahead, a new measure found considerably fewer consumers now expect a recession in the next 12 months compared to May. Meanwhile, on a six-month moving average basis, plans to purchase autos and homes have slowed, after picking up earlier in 2023. This may reflect rising costs to finance big-ticket items as the Fed continues to raise interest rates. Meanwhile, vacation plans within the next six months continued to flag, led largely by declines in plans to travel domestically. This is an important indicator of desires to spend on services ahead, which may be a signal that post-pandemic ‘revenge spending’ on travel may have peaked and is likely to slow over the rest of this year.”

      Source: University of Michigan and Yahoo

      About The Conference Board

      The Conference Board publishes the Consumer Confidence Index® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website: https://www.conference-board.org/data/consumerdata.cfm.

      The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org.

      Source: The Conference Board

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