In a sign of growing economic unease, household sentiment dropped in June as confidence in future income and business conditions waned, signaling potential trouble ahead.
Household economic sentiment dipped in June as confidence about future income and business conditions declined, according to a key measure.
The Conference Board’s consumer confidence index dropped to 100.4 from a downwardly revised 101.3. May's reading was initially reported at 102, and economists had forecast a June reading of 100.0.
The decline was driven by the expectations component, which gauges Americans' outlook on near-term business conditions, income, and labor markets. The expectations index fell to 73.0 from 74.9.
Readings below 80 in the expectations gauge typically signal a looming recession. This marks the fifth consecutive month the index has been in recession-forecasting territory.
Conversely, the present situation index rose, reflecting increased consumer confidence in current labor market conditions, which offset a decline in their assessment of current business conditions.
“Consumers expressed mixed feelings this month: their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled. Meanwhile, for the second month in a row, consumers were a bit less pessimistic about future labor market conditions. However, their expectations for both future income and business conditions weakened, weighing down the overall Expectations Index,” said Dana M. Peterson, Chief Economist at The Conference Board.
Peterson noted that the decline in confidence was most pronounced among consumers aged 35 to 54, while confidence improved among younger and older consumers.
Although consumers expressed less concern about a looming recession, their assessment of their own family’s financial situation worsened, both in terms of current conditions and expectations for the next six months.
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