A recession has been signaled by a leading economic indicator for the fifth consecutive month. Consumer confidence among Americans has fallen, with expectations about the economy and income decreasing as well, according to a recent survey. The Consumer Confidence Index by The Conference Board declined from 101.3 in May to 100.4 in June, with the most significant drop seen among consumers in the 35–54 age group. Consumers below 35 and above 54, however, showed improved confidence this month.
Dana M. Peterson, chief economist at The Conference Board, noted that confidence remained highest among the youngest and wealthiest consumers. While views about the current economic situation improved slightly, expectations for future income and business conditions weakened. The Expectations Index, which considers consumers’ short-term outlook for income, business, and labor market conditions, also declined in June and has stayed below the 80 level for the past five months, indicating a recession.
Despite less concern about the U.S. entering a recession, consumers were less optimistic about their family’s financial situation in the next six months. Elevated prices, especially for groceries and food, were the top factors impacting consumer views about the economy, followed by concerns about the labor market and the country’s political situation.
Contrasting with The Conference Board’s report, a Federal Reserve Bank of New York report showed that U.S. households have become more optimistic about their future financial situation. Perceptions about current financial situations have improved, with more respondents reporting being better off than a year ago. Year-ahead expectations also improved, with fewer respondents expecting to be worse off and more expecting to be better off a year from now.
Consumer spending plans over the next six months were mixed, with slight increases in interest for booking vacations and buying smartphones or other big-ticket items. Plans to purchase laptops or PCs decreased, while car buying plans stalled. Home buying intentions remained at a historically low level in June.
The decline in consumer confidence coincides with elevated inflation and interest rates. Annual inflation has remained at or above 3 percent since June 2023, while the Federal Reserve has maintained interest rates in the range of 5.25 to 5.5 percent since July last year. Wealth management specialist Peter Tarr highlighted that the confidence index is at its lowest level since 2011, indicating a need for interest rate cuts.
The Federal Reserve may consider raising interest rates higher, potentially impacting demand negatively. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, mentioned the possibility of interest rate increases, depending on the data. While keeping interest rates stable is more likely, adjustments may be made to control inflation effectively. Please provide a specific sentence or passage for me to rewrite.
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