Consumers' Views on the Current and Future Economy Are Aligning. Why That May Be Bad

Consumers are progressively affirmative astir nan economy, though a deteriorating labour marketplace and ongoing value pressures are still weighing connected their perceptions.

The Consumer Confidence Index came successful astatine 100.3 successful July, up from a downwardly revised 97.8 successful June, according to nan monthly study by nan Conference Board. Economists were expecting worse, forecasting a reference of 99.5 for nan month.

“Even though consumers stay comparatively affirmative astir nan labour market, they still look to beryllium concerned astir elevated prices and liking rates, and uncertainty astir nan future; things that whitethorn not amended until adjacent year,” said Dana M. Peterson, Conference Board main economist. 

Why Does Consumer Confidence Matter?

Consumer surveys thief springiness marketplace watchers penetration into economical trends.

Consumers' feelings astir nan existent system declined to a three-year low, but their expectations for nan early improved. The quality betwixt these 2 measurements is falling quickly, economists astatine Wells Fargo wrote, which could beryllium bad news.

Sharp drops successful that quality "tend to beryllium associated pinch downturns successful nan economy,” economists Tim Quinlan and Jeremiah Kohl wrote.

Labor Market Concerns Grow

There are indications successful nan Conference Board's study that immoderate of nan similarities could beryllium because consumers are noticing a deterioration successful labor-market conditions. 

More group deliberation jobs are plentiful than those that opportunity activity is difficult to travel by. However, nan emergence successful nan number of group saying jobs are harder to get roseate by 16%, nan astir since March 2021, wrote BMO's Senior Economist Jennifer Lee.

"More consumers expect early business and labour marketplace conditions to deteriorate adjacent word than nan opposite, and expectations for income maturation are anemic by humanities standards, peculiarly successful a clip of economical description ," wrote Moody's Analytics' Justin Begley. "As a result, consumers are indicating an volition to clasp disconnected connected purchasing plans. If actualized, this could meaningfully trim into existent depletion and economical growth."