WASHINGTON – The Conference Board’s Consumer Confidence Index rose in July to 100.3 (1985=100), from a downwardly revised 97.8 in June. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined to 133.6 from 135.3 last month. Meanwhile, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved in July to 78.2. That’s up from 72.8 in June but still below 80, the threshold which usually signals a recession ahead.
“Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years,” said Dana Peterson, chief economist at the Conference Board. “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future; things that may not improve until next year.”
Average 12-month inflation expectations remained stable at 5.4% in July, compared with a peak of 7.9% reported in 2022. The share of consumers expecting higher interest rates over the next 12 months dropped for the second month in a row to 50.3% – the lowest since February 2024. Meanwhile, consumers were positive about the stock market, with 49.1% expecting stock prices to increase over the year ahead (the highest share since March), 23.5% expecting a decrease and 27.4% expecting no change.
“The proportion of consumers predicting a forthcoming recession ticked up in July but remains well below the 2023 peak,” said Peterson. “Consumers’ assessments of their Family’s Financial Situation – both currently and over the next six months – was less positive. Indeed, assessments of familial finances have deteriorated continuously since the beginning of 2024.”
July’s write-in responses showed that elevated prices, especially for food and groceries, and inflation remain the key drivers of consumers’ views of the economy, followed by the U.S. political situation and the labor market. Mentions about the forthcoming elections increased, although the share of respondents believing the 2024 election would impact the economy was lower than write-ins from July 2016.
“Compared with last month, consumers were somewhat less pessimistic about the future,” said Peterson. “Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead. Meanwhile, consumers were a bit less positive about current labor and business conditions. Potentially, smaller monthly job additions are weighing on consumers’ assessment of current job availability: while still quite strong, consumers’ assessment of the current labor market situation declined to its lowest level since March 2021.”
On a six-month moving average basis, purchasing plans for homes fell to a 12-year low. While buying plans for cars were little changed, buying plans for most big-ticket appliances increased slightly. Additionally, more consumers reported plans to buy a smartphone or computer in the next six months.
Based on a supplemental question, planned spending on services appeared weaker in July 2024 than in July 2023. Consumers said they plan to spend less over the next six months on many discretionary items, including gambling, amusement parks and personal travel. They also plan to purchase less expensive services – for example, streaming entertainment instead of going to the movies. The planned reduction in services spending was across the board, but consumers continued to prioritize non-discretionary expenditures like healthcare and motor vehicle services.
Here is a more detailed look at the numbers for July:
Present situation
Consumers’ assessment of current business conditions was slightly less positive in July.
- 18.8% of consumers said business conditions were “good,” down slightly from 18.9% in June.
- 18.3% said business conditions were “bad,” up from 18.1%.
Consumers’ appraisal of the labor market deteriorated in July.
- 34.1% of consumers said jobs were “plentiful,” down from 35.5% in June.
- 16% of consumers said jobs were “hard to get,” up from 15.7%.
Expectations 6 months hence
Consumers were more optimistic about the short-term business conditions outlook in July.
- 14.8% of consumers expected business conditions to improve, up from 13.2% in June.
- 16.7% expected business conditions to worsen, down from 17.6%.
Consumers’ assessment of the short-term labor market outlook was less negative in July.
- 14.5% of consumers expected more jobs to be available, up from 13.1% in June.
- 16.7% anticipated fewer jobs, down from 18.3%.
Consumers’ assessment of their short-term income prospects was less pessimistic in July.
- 15.6% of consumers expected their incomes to increase, down from 16.2% in June.
- 11.6% expected their incomes to decrease, also down from 12.3%.
The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna, a technology company working in consumer insights and market research. The cutoff date for preliminary results was July 22.
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