Consumer Confidence Rose for a Fifth Month in a Row, Suggesting Continued Economic Growth
The Consumer Confidence Index from The Conference Board rose again in June, rising 7.3 points to 127.3, the highest level since March 2020 and in a range consistent with strong economic growth (see first chart).
The two major components of the index both had gains for the month. The present-situation component rose 9.0 points to 157.7, also the highest level since March 2020. This measure has posted a five-month gain of 72.2 points, nearly doubling the 73.0 reading from April 2020.
The expectations component gained 6.1 points, taking it to 107.0 from 100.9 in the prior month (see first chart). The details of the report suggest that consumers continue to grow more optimistic particularly with regard to current business and labor market conditions as dwindling government restrictions boost economic activity.
Regarding general business conditions, the percentage of consumers saying business conditions were good rose 4.6 points to 24.5 while those saying business conditions were bad fell 1.1 points to 19.5 in June. Those results put the net business conditions percentage at 5.0 for June, the best level since March 2020.
For the labor market, the net percentage of consumers saying jobs were plentiful gained 5.9 points to 54.4 while those saying jobs were hard to get fell 0.7 points to 10.9. The net percentage for current labor conditions comes in at 43.5 for June, up from 36.9 in May and well above the -15.7 in April 2020 (see second chart).
Regarding consumer expectations, consumers’ expectations for business conditions in six months, the percentage expecting good conditions added 2.3 points to 33.3 while the net percentage expecting bad conditions fell 3.8 points to 10.6. The net percentage for business conditions six months ahead rose 3.2 points to 10.1.
Consumer expectation for the labor market pulled back slightly, as the percentage expecting more jobs fell 2.0 points to 25.7 while the percentage expecting fewer jobs fell 1.5 points to 16.0. The net percentage for the outlook for jobs came in at 9.7, a decrease of 0.5 points from May.
Expectations for future income were positive with 18.6 percent expecting an increase while 8.5 percent expect a decrease, leaving the net percentage at 10.1 percent. That positive result helped support future buying plans as percentages for buying a home, auto, or major appliance all rose in the latest month.
Overall, the survey results suggest consumer attitudes continue to improve and are consistent with continued economic growth. Reduced government-enforced restrictions on consumers and businesses are driving stronger economic activity and boosting consumers’ views of current conditions and expectations for the future.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
