U.S. consumer confidence unexpectedly deteriorated in June as households increasingly worried about job availability, another indication that labor market conditions were softening against the backdrop of rising economic uncertainty because of the Trump administration’s tariffs.
The ebb in confidence reported by the Conference Board on Tuesday was across all age cohorts and nearly all income groups. It was also across the political spectrum, with the largest decline among Republicans.
Consumers remained pre-occupied with the import duties and were mostly undecided on big-ticket purchases. There was a decline in the share expecting their incomes to increase, though perceptions of the current financial situation remained solid.
The share of consumers viewing jobs as plentiful was the smallest since March 2021, aligning with the continued elevation in the number of people collecting unemployment checks as well as a moderation in job growth.
“Worry over prices in tandem with a diminished share of consumers who expect their household incomes to increase over the next six months points to still-elevated household financial anxieties,” said Tim Quinlan, a senior economist at Wells Fargo.
“Our forecast still calls for a stall in spending in the second half of this year. We have been making the case that what looks like resilience in retail spending in recent months may in fact be an indication of pulled-forward demand ahead of the full price impact of tariffs and that those outlays are apt to be curtailed in coming months.”
The Conference Board’s consumer confidence index dropped 5.4 points to 93.0 this month, erasing nearly half of the sharp gain in May. Economists polled by Reuters had forecast the index increasing to 100.0.
The cutoff date for the survey was June 18, before the U.S. joined in the fray between Israel and Iran, by bombing Tehran’s nuclear facilities. Trump on Monday announced a ceasefire. The survey noted that “references to geopolitics and social unrest increased slightly from previous months but remained much lower on the list of topics affecting consumers’ views.”
The share of consumers who viewed jobs as being “plentiful” dropped to 29.2%, the lowest since March 2021, from 31.1% in May. Some 18.1% of consumers said jobs were “hard to get,” down from 18.4% last month.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, narrowed to a four-year low of 11.1 from 12.7 last month. This measure correlates to the unemployment rate in the Labor Department’s monthly employment report.
Economists said that, combined with high numbers of people on unemployment benefits, raised the risk that the jobless rate could rise to 4.3% in June from 4.2% in May.
“Given the concurrent rise in continuing jobless claims, it looks increasingly likely that the unemployment rate will rise to 4.3% in next week’s employment report,” said Abiel Reinhart, an economist at JPMorgan.
INFLATION EXPECTATIONS EASE
Though consumers’ one-year inflation expectations decreased to 6.0% from 6.4% in May, the share expecting interest rates to rise was the highest since October 2023.
Federal Reserve Chair Jerome Powell told lawmakers on Tuesday the U.S. central bank needed more time to gauge if tariffs pushed up inflation before considering lowering rates. The Fed last week left its benchmark overnight interest rate in the 4.25%-4.50% range where it has been since December.
Stocks on Wall Street traded higher. The dollar fell against a basket of currencies. U.S. Treasury yields were lower.
While consumers were unsure about big-ticket purchases over the next six months, they were less inclined to spend more on services, though spending intentions for dining out, motor vehicle services, visits to museums and historic sites as well as fitness activities rose.
Vacation plans were unchanged, though more consumers planned to travel abroad. Plans to travel within the United States fell. Fewer consumers intended to buy a home, likely because of higher mortgage rates, which have combined with still-high house prices to reduce affordability.
But house price inflation is slowing as weak demand boosts the supply of unsold homes on the market.
A separate report from the Federal Housing Finance Agency showed single-family house prices fell 0.4% in April, the first decline since August 2022, after being unchanged in March.
That lowered the annual increase to 3.0% in April, the smallest rise since May 2023, from 3.9% in March. Economists do not expect an outright decline in house prices at a national level, though some individual markets could see sharp decreases.
“While the supply of homes for sale has increased, the housing market continues to suffer from a shortage of supply,” said Bernard Yaros, lead U.S. economist at Oxford Economics.
“However, some regions, mainly those that saw the biggest run-up in prices around the pandemic, may be at risk of a period of negative price growth, something already occurring in parts of Florida.”
