Consumer confidence in the United States reached a 16-month low in June, according to a survey released by the Conference Board on Tuesday. The drop was attributed to increased inflation concerns, particularly rising gas and food prices.
The Index fell to 98.7 in June, down 4.5 points from May’s level of 103.2, marking the second consecutive monthly decline to its lowest level since February 2021.
The Conference Board’s Senior Director of Economic Indicators, Lynn Franco, stated, “Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend.”
The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, fell drastically from 73.7 to 66.4 and is now at its lowest level since March 2013.
“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. 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,” Franco added.