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Economy in Brief

U.S. Consumer Confidence Deteriorates Further in June
by Tom Moeller  June 28, 2022

• Expectation reading plunges while current conditions ease.

• Employment expectations diminish.

• Expected inflation touches new high.

The Conference Board's Consumer Confidence Index weakened 4.4% (-23.4% y/y) in June to 98.7, after falling 5.0% in May, revised from -2.0%. The index level was the lowest since February 2021. A reading of 100.0 had been expected in the Action Economics Forecast Survey.

Consumers' views of future economic conditions dimmed considerably. The Consumer Expectations index weakened 9.9% in June (-38.8% y/y) to 66.4, the lowest level since March 2013. It was down 40.7% since the recent peak in March 2021. The Present Situations index slipped 0.2% (-7.8% y/y), the fifth decline in the last six months.

Labor market readings remained weak. The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, improved to 39.7% from 39.5%, but it remained below the near-record 44.7% in April. Calculated by Haver Analytics, this series has had a 69% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell this month to 51.3%, a thirteen -month low and down from the record 56.7% in March. The jobs hard-to-get measure eased to 11.6% of respondents, up from an expansion low of 9.6% in March.

Current business conditions were perceived as good by a lessened 19.6% of respondents in June. Expectations that business conditions would improve in six months fell sharply to 14.7% of respondents, down from a 42.5% high in May 2020. More jobs were expected in six months by a lessened 16.3% of respondents, roughly half the percentage in March of last year. The percentage expecting rising income weakened to 15.9% of respondents.

Inflation expectations ratcheted higher. The expected inflation rate in twelve months rose to a record 8.0%. (The series dates back to August 1987.) The figure was increased from a 4.4% low in January of 2020. Nearly three-quarters of respondents expected that interest rates would rise over the next twelve months, the most in three years.

The share of respondents planning to buy a home within six months held steady at 5.6% and remained below a July 2020 high of 7.7%. Those planning to buy a major appliance rose to 45.9% of respondents, still below the 53.9% high registered in July 2021.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.

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