Gas prices ease pressure on households
Americans felt slightly better about the economy in June as gasoline prices moved lower, although overall sentiment remained weak compared with historical levels.
The Conference Board said its consumer confidence index rose 0.6 point to 91.2. That remained below the 95.2 reading recorded a year earlier and far under the levels seen before the pandemic, when the index regularly stood above 120.
Iran war still weighs on sentiment
The improvement was modest because households are still absorbing the economic shock that followed the Iran war.
The conflict pushed oil and gasoline prices sharply higher, lifted inflation and reduced inflation-adjusted incomes for many Americans. Although energy prices have since retreated, confidence has recovered only gradually.
Consumers keep spending despite pessimism
The report points to a familiar post-pandemic pattern: Americans often express concern about the economy while continuing to spend.
That spending has helped keep growth intact even as inflation accelerated. Measures of consumer sentiment have become less reliable predictors of actual shopping behavior since the pandemic.
Conference Board sees mixed signals
“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” Dana Peterson, chief economist at the Conference Board, said in a statement.
Peterson added that consumers viewed current business conditions a little more favorably than in May, but saw a clear weakening in the labor market.
Spending supports second-quarter growth
A government report released earlier this month showed that consumers increased spending in May, even as gasoline costs remained elevated.
Analysts expect steady household outlays to have supported economic growth at an annual rate of about 2.5% in the April-June quarter.
Fuel costs retreat from wartime highs
Lower gasoline prices could improve consumer attitudes further in the months ahead.
Nationwide average gas prices climbed above $4.50 a gallon after the U.S.-Iran conflict began on Feb. 28. They have since fallen to $3.85 a gallon, according to AAA.
Labor market concerns increase
The survey showed that Americans became more cautious about hiring conditions in June.
The share of consumers who said jobs are “hard to get” rose to 22.5%, up from 19.8% in the previous month.
Job openings remain solid
Despite that weaker perception, government data released Wednesday showed that job openings held at a solid 7.6 million in May.
The figure suggests companies are still showing interest in recruiting workers, even as consumers grow more uncertain about employment prospects.
June jobs report comes next
The Labor Department will release its June employment report on Thursday.
Economists expect employers to have added 100,000 jobs, according to FactSet. The unemployment rate is forecast to remain low at 4.3%.
