U.S. Consumer Confidence Wanes As Expectations Diminish

The Conference Board Consumer Confidence Index declined to 126.4 during June (+7.8% y/y) following a May rise to 128.8, initially reported as 128.0. The June level fell short of expectations for 127.5 in the Action Economics Forecast Survey. The level of confidence has been moving sideways since November. The indexes in this report are based on 1985=100. During the past 10 years, there has been a 68% correlation between the level of consumer confidence and the y/y change in real PCE.

The expectations component declined to 103.2 (+3.6% y/y), the lowest level since December. The present conditions component was little changed at 161.1 (12.0% y/y). It was close to the highest level since March 2001.

Expectations for business conditions deteriorated sharply as 21.4% respondents thought that business conditions would improve, down from a 26.9% high in March 2017. Income was expected to increase in six months by a sharply lessened 18.8%, versus the February high of 23.5%. Expectations that there would be more jobs in six months ticked higher m/m to 20.0%, but was well below last year's 23.8% high.

Jobs were viewed as "plentiful" by a lessened 40.0% of respondents in June. Jobs were viewed as "hard to get" by 14.9%, the fewest in seventeen years. The net jobs assessment eased to +25.1 in June from +26.5 in May. It remained near the highest level since 2001. Over the past 15 years, this differential has been 96% inversely related to the unemployment rate. The percentage of respondents indicating the business conditions are "good" slipped from the 17-year high of 36.0%. The percentage saying business conditions are "bad" eased to 11.7%.

Expectations for the inflation rate in twelve months held steady m/m at 4.9%, up from November's 4.5% low, and the highest reading since September 2016. The percentage expecting higher interest rates over the next twelve months declined to 70.5%, but was up sharply from 67.6% in May of last year. Those looking to buy a home in the next six months improved m/m to 5.9%, but remained down sharply versus late last year.

Respondents under age 35 years registered a sharp decline in confidence to the lowest reading in roughly two years. For those aged 35-54 years, confidence increased modestly m/m and was near the highest level since 2000. And for those over 55 years of age, confidence has been fairly steady for six months, near the eighteen-year high.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.