Confidence Up Overall, But Consumers Downplay the Present: New York, July 30, 2024, The Conference Board’s consumer confidence index rose significantly in July, coming in at 100.3 (based on the 1985 rule = 100), compared with a downwardly revised 97.8 in June. Despite the overall increase in confidence, the present situation index, which is based on consumers’ assessments of current economic and labor market conditions, fell slightly to 133.6 from 135.3 last month.
In contrast, the expectations index, which reflects consumers’ expectations about short-term income, business and labor market conditions, improved significantly in July to 78.2, up from 72.8 in June. However, the figure remains below the 80 level, the threshold that often signals the likelihood of an imminent recession. “Despite the increase in confidence in July, it was not enough to break out of the narrow range that has characterized the past two years,” said Dana Peterson, chief economist at the Conference Board.
While there is still some optimism about the labor market, consumers remain concerned about rising prices, interest rates, and future economic uncertainty, issues that may not change significantly until next year.” Peterson added: “Compared to last month, consumers were less pessimistic about the future.
We saw a slight improvement in expectations of future income, but the overall assessment of future employment and work conditions remained negative. At the same time, optimism about current conditions for work and business declined. The small changes in the number of jobs added likely had an impact on consumers’ assessment of the current labor market situation, which, while still relatively strong, has fallen to its lowest level since March 2021.
Confidence Rises Among Young and Older Adults, with Age and Income Groups Divided:
New York, July 30, 2024 Consumer confidence improved in July, with a notable increase among younger age groups, such as those under 35, as well as among seniors over 55. Conversely, confidence levels declined among those aged 35 to 54. However, when looking at the six-month moving average, confidence remains highest among consumers under 35. On the other hand, the monthly data analysis did not show a clear pattern in terms of income groups, but on a six-month moving average basis, consumers earning more than $100,000 were the most confident, although the gap with other groups narrowed. “The share of consumers expecting a recession to come rose in July but is still well below its peak in 2023. Consumers’ assessments of their household’s financial situation also deteriorated, both currently and over the next six months.
In fact, household finance assessments have been declining since the beginning of 2024,” said Dana Peterson, chief economist at the Conference Board. These measures do not factor into the Consumer Confidence Index. In terms of inflation expectations, the median 12-month inflation outlook remained steady at 5.4% in July, compared with a peak of 7.9% in 2022.
On the other hand, the share of consumers expecting interest rates to rise over the next 12 months fell for the second straight month to 50.3%, the lowest since February 2024. Meanwhile, consumers were optimistic about the stock market, with 49.1% expecting stock prices to rise over the next year, the highest since March. In contrast, 23.5% expected a decline in stock prices, while 27.4% expected no change.
The impact of prices and inflation on consumer sentiment in July 2024
New York, July 30, 2024, Written responses for July showed that rising prices, particularly for food and grocery items, and inflation (the rate of change in prices) continue to be the primary drivers of consumers’ views on the economy. The U.S. political situation and the labor market are next as significant sources of concern. Despite an increase in references to the upcoming election, the proportion of respondents who believe the 2024 election will affect the economy was lower than in July 2016.
In terms of spending planning, a six-month moving average indicated that home purchase plans fell to a 12-year low. While plans to purchase cars were unchanged, there was a slight increase in plans to purchase most major home appliances. In addition, more consumers reported that they planned to purchase a smartphone or a laptop/personal computer in the next six months. On the other hand, based on a supplemental question, planned spending on services appeared to weaken in July 2024 compared to July 2023.
Consumers indicated that they plan to spend less on several discretionary items over the next six months, including gambling, theme parks, and personal travel. They also indicated that they will reduce their purchases of less expensive services, such as streaming instead of going to the movies. Despite the planned reduction in spending on services, consumers continued to prioritize non-discretionary expenses such as health care and auto services.
Assessment of Household Financial Status and Recession Risk in July 2024: NEW YORK, July 30, 2024 Consumers’ assessment of their household’s current financial situation declined in July, as they expressed less optimism about their household’s financial health in the future. This decline reflects growing concern about personal financial stability and the overall economy.
Consumers’ assessment of current business conditions is somewhat less positive in July
Consumers’ expectations of a recession in the next 12 months remain well below their peak in 2023. This suggests that concerns about a recession have declined compared to the previous period, which may reflect a relative improvement in economic confidence or a stabilization in future economic expectations.
In terms of spending, consumers plan to spend less on discretionary services over the next six months. This includes cutting back on entertainment, travel, and non-essential shopping, reflecting a trend toward cutting back on non-essential expenses and focusing on more necessary expenses.
The monthly Consumer Confidence Survey is based on an online sample and is conducted for The Conference Board by Toluna. Toluna is a leading technology company that provides consumer insights and market research through its innovative technology, expertise, and a panel of more than 36 million consumers. The deadline for preliminary results is July 22, 2024.
Consumers’ assessment of current business conditions is somewhat less positive in July. :18.8% of consumers said business conditions were “good,” down slightly from 18.9% in June. 18.3% said business conditions were “bad,” up from 18.1%.
Consumers’ assessment of the labor market deteriorated in July: 34.1% of consumers said jobs were “plentiful,” down from 35.5% in June. 16.0% of consumers said, “getting a job is hard,” up from 15.7%.
Six-month outlook: Consumers were more optimistic about the outlook for short-term business conditions in July. 14.8% of consumers expected business conditions to improve, up from 13.2% in June. 16.7% expected business conditions to deteriorate, down from 17.6%. Consumers’ assessment of the labor market’s short-term outlook was less negative in July. 14.5% of consumers expected more jobs, down from 13.1% in June. 16.7% expected a job loss, compared with 18.3%. Consumers were less pessimistic about their short-term income prospects in July
