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Economy in Brief

U.S. Consumer Confidence Declines As Expectations Diminish
by Tom Moeller  June 26, 2012

The Conference Board's June Index of Consumer Confidence Index fell for the fifth month this year. It declined 3.7% to 62.0 from 64.4 last month, initially reported as 64.9. Nevertheless, the index remained up by more than half from the October low. The June figure was below Consensus estimates for 63.2. During the last ten years there was been a 48% correlation between the level of confidence and the three-month change in real PCE.

A lower reading of the consumer expectations component of confidence led the decline this month with a 6.5% decline (+1.0% y/y) to 72.3, also off for the fifth month this year. The percentage expecting business conditions to improve fell to its lowest (15.5%) since November while the percent expecting more jobs dropped slightly to its least (14.1%) since December.

Consumers' reading of the present situation improved 3.8% (17.3% y/y) but that followed a 12.3% May drop. Respondents indicating that business conditions were good improved moderately. In addition, the percentage reporting that jobs were hard to get rose slightly to 41.5%, its highest since January.

Expectations for inflation in the next twelve months fell m/m to 5.3% versus a high of 6.2%, equaling the lowest figure since December 2010. The percentage of people looking for stock prices to rise again dropped sharply this month and the percent who are bearish jumped. The percentage expecting higher interest rates fell.

Headline figures on consumer confidence are carried in Haver's USECON database. The Conference Board's detailed data are found in Haver's CBDB database, and the consensus expectations figure is from Actions Economics, as tabulated in the AS1REPNA database.

Conference Board (SA, 1985=100) Jun May Apr Y/Y % 2011 2010 2009
Consumer Confidence Index 62.0 64.4 68.7 7.6 58.1 54.5 45.2
Present Situation 46.6 44.9 51.2 27.3 36.2 25.7 24.0
Expectations 72.3 77.3 80.4 1.0 72.8 73.7 59.3
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