Consumers experienced a slight boost in confidence levels during July.
In July 2021, consumer confidence showed a modest improvement, yet concerns about the job market and inflation remained prevalent. The Conference Board's Consumer Confidence Index increased by 2.0 points to 97.2, indicating some stabilisation after earlier declines [1][4]. However, the Present Situation Index, which reflects current business and labour market conditions, saw a decline of 1.5 points to 131.5, with consumers expressing a significant drop in job availability sentiment—the lowest since March 2021 [1][2][3].
The increase in consumer confidence was not uniform, as the Present Situation Index suggests. A growing share of consumers reported jobs as "hard to get" in July (18.9%), up significantly from 14.5% in January [1][2][3]. This marks the seventh consecutive month of worsening views on employment conditions.
In regard to inflation, while not quantified directly in these indices, the cautious consumer sentiment coupled with restrained optimism on future income and business conditions suggests inflation concerns contribute to overall economic uncertainty [2][3]. Consumers’ expectations about income improved slightly, yet the overall Expectations Index remained subdued at 74.4, still below the critical 80-point threshold that typically signals a looming recession, and this level had persisted for six consecutive months [1][2][4].
Spending intentions for services weakened for the second month in a row, with dining out, travel, and lodging all seeing declines [5]. However, there was an uneven demand for big-ticket items like appliances, while interest in electronics crept upward [6]. Consumer spending intentions for cars and homes declined in July, but remained relatively stable on a six-month average basis [7].
Some respondents referenced the "Big Beautiful Bill" passed by Congress, with opinions divided on its economic potential [8]. Domestic vacation plans fell overall, while a slightly larger share of consumers expressed interest in traveling abroad [9].
According to The Conference Board's senior economist, Stephanie Guichard, consumers are regaining some confidence in future conditions, particularly regarding business prospects, employment, and personal income [10]. Despite the small lift in overall confidence, consumer perceptions of current economic conditions were mixed [11].
In conclusion, while consumer confidence showed a slight improvement in July 2021, concerns about the job market and inflation persisted. The sustained low expectations for future conditions, despite the small rise in overall confidence, indicate ongoing recession fears [1][2][3][4].
References:
- The Conference Board
- Bloomberg
- CNN Business
- The Wall Street Journal
- The New York Times
- MarketWatch
- USA Today
- Politico
- Fox Business
- CNBC
- Forbes
- In relation to business conditions, the Present Situation Index revealed a significant drop in job availability sentiment among consumers, suggesting concerns about employment in July 2021.
- The sustained low expectations for future income and business conditions, as reflected in the Consumer Expectations Index, indicate that inflation concerns continue to contribute to overall economic uncertainty.
