Inflation Concerns Drive Down Consumer Confidence

The Consumer Confidence Index hit its lowest level since February 2021, falling to 98.7, a report from the Confidence Board said Tuesday (June 28).

The index fell 4.5 points from 103.2 in May, when it also fell.

The Present Situation Index, which shows how consumers feel about current business and labor market conditions, declined only marginally.

However, the Expectations Index, showing how consumers view the short-term outlook for business and market conditions along with income, declined sharply, from 73.7 to 66.4, which is the lowest point it has been since March 2013.

According to Lynn Franco, senior director of economic indicators with The Conference Board, the lower numbers were showing the increasing worries about inflation. Rising gas and food prices were some of the main factors, along with the increasing risk of a recession by the end of the year.

“Purchasing intentions for cars, homes and major appliances held relatively steady – but intentions have cooled since the start of the year, and this trend is likely to continue as the Fed aggressively raises interest rates to tame inflation,” she said. “Meanwhile, vacation plans softened further as rising prices took their toll. Looking ahead over the next six months, consumer spending and economic growth are likely to continue facing strong headwinds from further inflation and rate hikes. ”

Though there have been reports of inflation and economic stressors, data from the US Census Bureau has shown spending isn’t declining.

See also: Durable Goods Report Shows Consumer Spending Holding Up Under Strain

The report showed that orders for capital goods, tied to the machines, computers and parts that end up as finished goods, were up 50 basis points in May – a boost from the 30-basis-point pace in April.

The data shows that there has also been a 70% boost for orders for manufactured goods, hitting $ 267.2 billion, with that number increasing in 12 of the last 13 months.

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