U.S. consumers felt more confident in July as expectations about the near future improved. But in a reversal of recent trends, sentiment about current conditions weakened.
The Conference Board business research group said Tuesday its consumer confidence index rose to 100.3 in July from a downwardly revised 97.8 in June.
The index measures Americans’ assessment of current economic conditions and their expectations for the next six months.
Americans’ short-term expectations for income, business and the labor market rose to 78.2 in July from 72.8 in June. A reading below 80 could signal a possible recession in the near future.
Consumers’ view of current conditions fell to 133.6 points in July, from 135.3 points in June.
High food and grocery prices remain a key driver of consumer sentiment toward the U.S. economy. Although inflation has fallen sharply since the Federal Reserve began raising interest rates in March 2022, price increases remain well above pre-pandemic levels.
“Although consumers remain relatively positive about the job market, they are still concerned about rising prices, interest rates, and uncertainty about the future, which may not improve until next year,” said Dana Peterson, chief economist at The Conference Board.
The number of respondents who said they plan to buy a home fell to a 12-year low as interest rates, housing prices and supply remain high. Discouraging home shoppers.
The number of consumers expecting an economic recession rose this month but is still far from its peak in 2023, the agency said.
Consumer spending accounts for about 70% of U.S. economic activity, and economists watch it closely for clues to American consumer sentiment.
While the U.S. economy and labor market remain broadly healthy, some weaknesses have emerged, driven by rising interest rates.
Unemployment rate rose to 4.1% in June – the highest rate since November 2021 – even as U.S. employers added another 206,000 jobs last month.
The government also announced job openings in the United States on Tuesday. It decreased slightly in June.There were 8.18 million job openings in June, a still strong number, but down from 8.23 million in May.
The country’s economy grew by 1.4% in the second quarter. Strong annual growth rate of 2.8%But this comes after growth of just 1.4% in the second quarter of the year.
This year’s economic slowdown reflects sharply higher borrowing rates on home loans, auto loans, credit cards and many business loans as a result of the Federal Reserve’s series of aggressive interest rate hikes.
The Federal Reserve wraps up its two-day meeting on Wednesday, but most analysts do not expect any change in interest rates. Most analysts expect inflation to continue to rise. First rate cut in more than four years Its next meeting is scheduled to be held in September.
