Conference Board Survey Signals Ugly Job Market, Weakest ‘Present Situation’ In Over 5 Years

The Conference Board’s measure of Americans’ Consumer Confidence fell more than expected in July, from an upwardly revised 92.2 to 90.8 (well below the 92.4 expectation)…

The Present Situation index fell to 114.9 (below 117.5 exp) –  its weakest since Feb 2021 while Expectations were unchanged at 74.7 (very slightly better than the 74.4 exp).

“Consumer confidence moderated slightly in July, continuing a general downward sloping trajectory since late 2021,” said Dana M Peterson, Chief Economist, The Conference Board.

“The Present Situation Index was less positive for a third consecutive month while the Expectations Index remained in negative territory. Consumer appraisals of current business conditions and, to a lesser extent, perceptions of the current labor market both softened.

Looking ahead, consumers anticipate little improvement in business conditions over the next six months, but expectations for the labor market were slightly less negative. Expectations for household incomes moderated but remained optimistic overall.”

On a six-month moving average basis, by age, confidence for consumers under 35 remained the highest, while confidence among those aged 35-54 showed the greatest improvement.

By income, confidence was mixed, but generally higher-income groups were more optimistic.

By generation, confidence for Gen Z and Millennials remained the highest, while confidence fell the most for the Silent Generation on a six-month moving average basis.

By political affiliation, confidence among Independents and Democrats softened while Republicans were somewhat more positive.

And while jobless claims dropped to their lowest level since 1969 last week, perceptions of current employment conditions declined, with the labor market differential – the share of consumers saying jobs are “plentiful” minus the share saying jobs are “hard to get” – dipping by 0.7 ppts to +3.1%. This downshift was driven by fewer consumers reporting that jobs are “plentiful”, while the those saying jobs are “hard to get” dipped slightly over the month.

Consumers’ average and median 12-month inflation expectations were less elevated in July. Most consumers—61.3%, unchanged from June—still expected higher interest rates over the next 12 months. Notwithstanding recent volatility in the equity markets, consumers still expected higher stock prices a year from now. 

Consumers’ write-in responses on factors affecting the economy continued to be mostly pessimistic in July.

References to prices and oil and gas eased in frequency but remain elevated. Comments about food and grocery prices increased.

Mentions of war, geopolitics, and conflict eased during the sample period. However, as the fighting has reaccelerated quite recently there could be an increase in these mentions in the revised data for July.