By Alice Seeley
U.S. consumer confidence fell in June for the second month in a row, reaching its lowest level in 16 months, according to the Conference Board. The index decreased to 98.7, down 4.5 points from its reading in May, as Americans are increasingly worried about inflation and the rising interest rates.
Surprisingly, the present situation index, based on consumers’ current view on business and the job market, only fell .3 from 147.4 to 147.1.
“The more cyclical present situations index had held up much better as the labor market still remains strong and should power consumer spending in the near term despite rising interest rates and higher inflation,” said Chief U.S. economist at Oxford Economics, Kathy Bostjancic.
However, the Board’s expectation index declined 7.4 points to 66.4 from the previous month. It is now at its lowest reading since March 2013. The Board’s senior Director of Economic Indicators, Lynn Franco, stated this low reading suggests “weaker growth in the second half of 2022 as well as growing risk of recession by year-end.”
Although consumers expressed their concern, they showed no indication of reducing spending. Buying plans for cars, houses, and major appliances are increasing, the Conference Board reported on June 29.
“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 said.
