US Consumer Confidence Hits 16-Month Low on Drag From Inflation

(Bloomberg) — US consumer confidence dropped in June to the lowest in more than a year as inflation continues to dampen Americans’ economic views.

The Conference Board’s index decreased to 98.7 from a downwardly revised 103.2 reading in May, data Tuesday showed. The median forecast in a Bloomberg survey of economists called for a decline to 100.

A measure of expectations — which reflects consumers’ six-month outlook — dropped to the lowest in nearly a decade as Americans grew more downbeat about the outlook for the economy, labor market and incomes. The group’s gauge of current conditions fell slightly.

As the Federal Reserve raises interest rates to curb price pressures, higher borrowing costs risk denting purchases for big-ticket items like homes, cars and appliances. Despite sagging sentiment, buying plans are so far holding up, the report showed.

The share of respondents who said they intend to buy a vehicle or major appliance in the next six months increased from a month earlier. At the same time, vacation plans, both domestic and internationally, softened, likely due to higher airfares and gas prices.

Consumers see prices in the next year rising at the fastest rate in the group’s data back to the 1980s. Separate data on inflation-adjusted consumer spending will be released Thursday.

“Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.

“Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend.”

What Bloomberg Economics Says…

“The widening gap between consumers’ present situation and their expectations of the future raises the risk of recession. Apprehension about the direction of the economy could increasingly influence consumer behavior, resulting in a downward spiral of slumping demand.”

–Eliza Winger, economist

Nearly 30% of respondents expect business conditions to worsen in the back half of the year, the largest share since March 2009, during the height of the financial crisis.

The figures reinforce data last week from the University of Michigan, which showed consumer sentiment in June remained near a record low. Respondents expect prices to rise in the next 12 months at nearly the fastest pace in 40 years.

The share of consumers who said jobs were “plentiful” decreased slightly to 51.3%, and six months from now, respondents were also more pessimistic. The most respondents since August 2020 see their incomes dropping in that time.

(Adds context on inflation expectations and Bloomberg Economics quote)

–With assistance from Chris Middleton and Maria Paula Mijares Torres.

© 2022 Bloomberg L.P.

Follow us on social media for the latest updates in B2B!

Latest

The Culinary Compass: How Gastronomy Is Redefining Travel with Wayne Conte
The Culinary Compass: How Gastronomy Is Redefining Travel with Wayne Conte
February 20, 2024

In recent years, the global pandemic reshaped our relationship with travel and dining, propelling a surge in culinary tourism. As restrictions lifted, eager travelers began prioritizing unique dining experiences, often planning their journeys around coveted restaurant reservations. This shift reflects a broader trend where gastronomy is no longer a mere aspect of travel but […]

Read More
Streaming the Game: Transforming Sports Broadcasting in the Digital Era
February 20, 2024

The recent rise of streaming services over traditional terrestrial television has marked a significant shift in how audiences consume sports content. This evolution is propelled by advancements in digital technology and changing viewer preferences, emphasizing the need for a more immediate and interactive broadcast experience. The stakes are high, with platforms like Peacock streaming record-breaking […]

Read More
marketing team’s AI journey
Kickstarting a Marketing Team’s AI Journey
February 20, 2024

A marketing Team’s AI journey is necessary and critical for the success of a brand’s overall mission and execution. In the latest episode of the Marketing AI Sparkcast, host Aby Varma sits down with Daniel Englebretson, CEO of Elynox and an adjunct professor at Wake Forest University and Elon University, to discuss the evolution […]

Read More