American consumers experienced a decrease in confidence in June as their expectations for the near-term future declined.
The Conference Board, a business research group, reported on Tuesday that the consumer confidence index dropped to 100.4 in June from 101.3 in May. The decrease in the index was not as severe as analysts had anticipated.
The index evaluates both Americans’ current economic conditions and their outlook for the next six months.
The measurement of Americans’ short-term expectations for income, business, and the job market slipped to 73 in June from 74.9 in May. A reading below 80 could indicate a potential recession in the near future.
On the other hand, consumers’ assessment of current conditions increased in June to 141.5, up from 140.8 in May.
“Confidence dipped in June but remained within a consistent range that has persisted over the past two years, with positive current labor market perspectives outweighing concerns about the future,” stated Dana Peterson, the Chief Economist at the Conference Board.
Despite a slight increase in the unemployment rate to 4% in May, U.S. employers added a robust 272,000 jobs last month. This suggests that companies maintain confidence in the economy, continuing to hire even amidst high interest rates.
The substantial job growth in May was largely driven by consumer spending on travel, entertainment, and other services. U.S. airports saw close to record levels of traffic over the Memorial Day weekend.
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Despite the positive job gains in May, there are signs of weakening in the labor market: Job postings in April reached their lowest level since 2021, and the number of Americans receiving unemployment benefits has increased for seven consecutive weeks.
On Monday, Mary Daly, President of the San Francisco Federal Reserve, noted that the labor market remains healthy but cautioned that potential slowing could lead to higher unemployment levels, which will require close monitoring.
While most economic indicators suggest that the U.S. economy is strong by historical standards, there are indications of growth slowing down.
The nation’s economy experienced a sharp slowdown in the first quarter of 2024, with an annual growth rate of 1.3%, down from a robust 3.4% growth rate in the final quarter of 2023.
Retail sales saw a slight uptick of just 0.1% in May compared to April, as high prices on essentials and high interest rates dampened spending.
In response to cautious spending amidst inflation, major retailers are offering discounts this summer. The latest quarterly earnings reports from large retailers show that while consumers are still spending, they are becoming more conscious of prices and making selective choices.
Consumer expectations of a recession within the next year declined in June after increasing in the previous two months, according to the Conference Board.
