Consumer Confidence: Labor Market vs. Other Concerns?

By at 25 June, 2024, 2:49 pm

by Raymond J. Keating –

According to The Conference Board’s latest read, consumer confidence edged down in June. And the divergence between Consumer Confidence Index’s two components – i.e., the Present Situation Index and the Expectations Index – persisted.

The Consumer Confidence Index moved down from 101.3 in May to 100.4 in June (1985 = 100).

The Present Situation Index, which is “based on consumers’ assessment of current business and labor market conditions,” actually moved up from 140.8 in May to 141.5 in June. Meanwhile, the Expectations Index, which reflects “consumers’ short-term outlook for income, business, and labor market conditions,” decreased from 74.9 in May to 73.0 in June.

Dana M. Peterson, chief economist at The Conference Board, made some additional points worth noting:

“Consumers expressed mixed feelings this month: their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled. Meanwhile, for the second month in a row, consumers were a bit less pessimistic about future labor market conditions. However, their expectations for both future income and business conditions weakened, weighing down the overall Expectations Index.”

The divergence between the Present Situation Index and the Expectations Index – which has been signaling a recession for last five months – has been ongoing during much of the post-pandemic period, as noted in the following chart from the Conference Board.

Peterson makes an interesting point on this:

“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, Confidence could weaken as the year progresses.”

That point about the labor market warrants further reflection given an aging and stagnating U.S. population, combined with significant current hostility toward immigration. And it must be understood that these same population and immigration phenomenon weigh against entrepreneurship and innovation now and in the future.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.


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