Consumer confidence stabilizes for July, but concerns remain

NEW YORK – Consumer confidence held fairly steady for July after a big drop in June, according to the latest report from the Conference Board.

The Consumer Confidence Index was reported to have increased by just 2.0 points for the month, up to 97.2 from the revised 95.2 in June. Consumers’ outlook on current business and labor market conditions barely moved as well, dropping just 1.5 points to 131.5.

“Consumer confidence has stabilized since May, rebounding from April’s plunge, but remains below last year’s heady levels,” said Stephanie Guichard, senior economist for global indicators at the Conference Board. “In July, pessimism about the future receded somewhat, leading to a slight improvement in overall confidence.”

Looking to the future, the Expectations Index saw the biggest jump as it reached 74.4 – an increase of 4.5 points but still below the 80-mark that signals an upcoming recession. The Expectations Index has now been below 80 for six straight months.

“All three components of the Expectation Index improved, with consumers feeling less pessimistic about future business conditions and employment, and more optimistic about future income,” Guichard said. “Meanwhile, consumers’ assessment of the present situation was little changed. They were a tad more positive about current business conditions in July than in June.”

The slight confidence gain in July was driven by consumers aged 35 years and up and was shared across all income groups except those with an annual income below $15,000.

According to Guichard, tariffs were still the most noted concern in consumers’ write-in responses. Consumers’ references to higher prices and inflation increased for the month even though the average 12-month inflation expectations eased slightly (now 5.8 percent, down from 5.9 percent).

Here are some other key points from this month’s report:

Present Situation

Consumers’ assessments of current business conditions were slightly more positive in July.

• 20.1 percent of consumers said business conditions were “good,” down from 20.5 percent in June.
• But only 14.3 percent said business conditions were “bad,” down from 15.0 percent.

Consumers’ views of the labor market cooled somewhat in July.

• 30.2 percent of consumers said jobs were “plentiful,” up from 29.4 percent in June.
• However, 18.9 percent of consumers said jobs were “hard to get,” up from 17.2 percent.

Expectations Six Months Hence         

Consumers were less pessimistic about future business conditions in July.

• 18.4 percent of consumers expected business conditions to improve, up from 17.1 percent in June.
• 23.3 percent expected business conditions to worsen, down from 24.8 percent.

Consumers’ outlook for the labor market was also less negative in July.

• 17.5 percent of consumers expected more jobs to be available, up from 15.9 percent in June.
• 25.4 percent anticipated fewer jobs, down slightly from 25.7 percent.

Consumers’ outlook for their income prospects was more positive in July.

• 18.2 percent of consumers expected their incomes to increase, up from 17.6 percent in June.
• 12.0 percent expected their income to decrease, down from 12.9 percent.