U.S. Consumer Confidence Increases in July; Inflation Expectations Ease
by:Tom Moeller
|in:Economy in Brief
Summary
- Decline reverses much of June decline.
- Expectations improve but present situation reading declines.
- Inflation expectations edge down.
The Conference Board's Index of Consumer Confidence increased 2.1% (-4.6% y/y) in July to 97.2 after falling 3.3% in June, revised from down 5.5%, and rising an unrevised 14.8% in May to 98.4. A July reading of 95.9 had been expected in the Action Economics Forecast Survey. The index remained 13.8% below its November peak.
The Expectations Index increased 6.4% (-8.3% y/y) this month after declining 5.0% in June, revised from a 6.3% decline, and rising 32.9% in May. The Present Situation index fell 1.1% (-1.2% y/y) after falling 1.8% in June, revised from down 4.7%, following a 3.4% increase in May.
The percentage of respondents assessing business conditions as “good” dipped to 20.1% in July after falling to 20.5% in June. The index hit a high of 22.0% in October. The percentage assessing conditions as “bad” fell to 14.3% after rising to 15.0% in June. The appraisal of labor market conditions improved as 30.2% described “jobs plentiful” versus 29.4% in June. Jobs were viewed as “hard to get” by 18.9% of respondents this month, up from 17.2% in June. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) fell to 11.3% compared to 12.2% in June and 12.7% in May. This measure remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.
Expectations for business conditions improved this month as an increased 18.4% of respondents expect conditions to improve over the next six months, after 17.7% did so in June, while 23.3% expect them to worsen, after falling to 24.8% in June. On employment, an improved 17.5% expect the number of jobs to increase over the next six months versus 15.9% in June. The percentage expecting the number of jobs to decline in the next six months eased to 25.4% after falling to 25.7% in June. A greater 18.2% of respondents expect income to increase in six months, up from 17.6% in June. That remained down from a high of 20.7% in November and compares to 12.0% who expect income to decrease, down from 12.9% in June.
The expected rate of price inflation over the next twelve months dipped to 5.8% in July after falling to 5.9% in June. These remain up from a low of 5.0% in November. Interest rates are expected to rise this year by a lessened 53.0% of respondents, but this remained up from a 45.5% November 2024 low. The percentage of respondents expecting equity prices to increase over the next twelve months rose to 47.9%, up from 46.0% in June and the most in six months, while the percentage expecting a decline in stock prices fell to 28.7% after declining to 33.1% in June.
The percentage of respondents planning to buy a home fell to 5.6% this month after falling to 6.1% in June. Plans to purchase an automobile fell to 11.4% this month, a three-month low.
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.
Understanding Job Growth from the Federal Reserve Bank of Philadelphia can be found here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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