The Conference Board reported that its Consumer Confidence Index improved in July as increased optimism for the future offset concerns about present conditions.

Data released Tuesday, July 30, showed that The Conference Board’s gauge increased to 100.3 from a downwardly revised 97.8 in June.

The median estimate in a Bloomberg survey of economists called for a reading of 99.7.

Based on consumers’ assessment of today’s business and labor market conditions, The Conference Board’s Present Situation Index declined to 133.6 from 135.3 last month. Meanwhile, based on consumers’ short-term outlook for income, business and labor market conditions, its Expectations Index improved in July to 78.2, up from 72.8 in June, but remained below 80, the threshold which often signals a recession ahead.

The cutoff date for the Index’s preliminary results was July 22.

“Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years,” said Dana M. 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.”

“Compared to last month, consumers were somewhat less pessimistic about the future. 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.

“In July, confidence improved among consumers under 35 and those 55 and older; only the 35 to 54 age group saw a decline. On a six-month moving average basis, confidence remained the highest among consumers under 35. On a month-over-month basis, no clear pattern emerged in terms of income groups. On a six-month moving average basis, consumers making over $100K were the most confident, but the gap with other groups narrowed,” continued Paterson

“The proportion of consumers predicting a forthcoming recession ticked up in July but remains well below the 2023 peak. 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,” Patterson added.

Other findings from The Conference Board Consumer Confidence Index include:

  • The average 12-month inflation expectation remained stable at 5.4 percent in July, compared to a peak of 7.9 percent reported in 2022. The share of consumers expecting higher interest rates over the next 12 months dropped for the second consecutive month to 50.3 percent, the lowest since February 2024. Meanwhile, consumers were optimistic about the stock market, with 49.1 percent expecting stock prices to increase over the year ahead, the highest share since March, 23.5 percent expecting a decrease and 27.4 percent expecting no change.
  • July’s write-in responses showed that elevated prices, especially for food and groceries, and inflation (the rate of change in prices) remain the key drivers of consumers’ views of the economy, followed by U.S. political situation and the labor market. Mentions about the forthcoming U.S. Presidential election increased, although the share of respondents believing the 2024 election would impact the economy was lower than write-ins from July 2016.
  • On a six-month moving average basis, home purchasing plans fell to a 12-year low. While buying plans for autos were little changed, buying plans for most big-ticket appliances increased slightly. More consumers reported plans to buy a smartphone, laptop or PC in the next six months.
  • Based on a supplemental question to consumers, planned spending on services was weaker in July 2024 than in July 2023. Respondents said they planned to spend less over the next six months on discretionary items, including gambling, amusement parks, and personal travel. They also plan to purchase less expensive services like streaming 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.

The Conference Board, Inc. is a 501 non-profit business membership and research group organization. The company has over “1,000 public and private corporations and other organizations as members, encompassing 60 countries.”

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