Consumer outlooks are improving and fear of a recession is diminishing according to the ongoing Conference Board Consumer Confidence Index study.
With regards to the Presentation Situation Index based on June consumer assessments, 23.7% of study participants said business conditions were good, up from 19.7% in May, while 16.3% said business conditions were bad, down from 16.7% month over month.
In looking at the labor market 46.8% of consumers said in June that jobs were plentiful, up from 43.3% in May, while 12.4% of consumers said jobs were hard to get, slightly lower than 12.6% registered in the previous month.
As they viewed the second half of the year, 14.2% of consumers in June said they expect business conditions to improve, up from 13.2% in May while 17.7% expect business conditions to worsen, down from 21.4% in the previous month. At the same time,15.5% of consumers in June said they expect more jobs to be available in the second half, up from 13.8% in May while, month over month,16% anticipate fewer jobs down from 21.1%.
From the June perspective according to the Conference Board study:
- 16.9% of consumers expect their incomes to increase, down from 18.9% in May
- 11.9% expect their incomes will decrease, up from 11.4% in May
- 28.5% of consumers said their current family financial situation is good, down slightly from 29.2% in May
- 18.2% said their current family finances are bad, down from 19.5% in May
- 30.3% of consumers expect their family finances to be better, up from 28.9% in May
- 13.7 % expect their family finances to be worse, down from 14.9%
The generally more positive appraisals extend to expectations about a recession. The Conference Board noted that after rising steadily since August 2022, recession fears appear to have eased significantly in June as 69.3% of consumers say a recession is somewhat or very likely, down from 73.2% in May.
“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, conference board chief economist, in announcing the study results. “Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next six to 12 months. Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Indeed, the spread between consumers saying jobs are ‘plentiful’ versus ‘not so plentiful’ widened, indicating upbeat feelings about a labor market that continues to outperform. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”
In an interesting turn and despite their greater confidence about the economy expressed in June, consumers were a little less optimistic about income gains. Yet, they were more optimistic about their family finances, suggesting consumers faced with inflation and worried about economic prospects, have been putting their personal fiscal houses in order.
“While income expectations ticked down slightly in June, new questions included in this month’s release found a notably brighter outlook for consumers’ family finances,” Peterson acknowledged. “Around 30% expect their family’s financial situation to be ‘better’ in the next six months, compared to less than 14% expecting it to be ‘worse.’ This might reflect consumers’ belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead. Indeed, the 12-month forward inflation expectations gauge fell to 6% in June, the lowest reading since December 2020.”
Recessionary worries, while still significant, have at least eased, even if the biggest ticket purchases have become less likely.
“Although the Expectations Index remained a hair below the threshold signaling recession ahead, a new measure found considerably fewer consumers now expect a recession in the next 12 months compared to May,” Peterson said. “Meanwhile, on a six-month moving average basis, plans to purchase autos and homes have slowed, after picking up earlier in 2023. This may reflect rising costs to finance big-ticket items as the Fed continues to raise interest rates. Meanwhile, vacation plans within the next six months continued to flag, led largely by declines in plans to travel domestically. This is an important indicator of desires to spend on services ahead, which may be a signal that post-pandemic ‘revenge spending’ on travel may have peaked and is likely to slow over the rest of this year.”
