Consumer confidence fluctuated in June. The Conference Board's Consumer Confidence Index was 83.5, down slightly from the revised 83.6 in May. Economists had expected a several point decline. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was mixed across both portions of the Conference Board index. The Expectations portion of the index increased moderately. This measure of future economic activity was 95.9, up 1.4 points from May.
The Present Conditions index, a factor in the total composite index, decreased to 64.9 from 67.3 in May. This index measures how consumers perceive the current state of the economy.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in June to 89.7 from 92.1 in May. Despite the drop, the index came in above both the preliminary mid-month estimate and economists' expectations. Like the Conference Board index, the component indices were mixed. The Expectations index dropped 5.0 points to 86.4 in June, while the Present Conditions portion was up 1.5 points to 94.7.
Despite the dip in confidence in June, there is support for more consumer spending. Households should begin seeing the effects of the recent economic stimulus package with reduced withholdings and tax rebate checks in the coming months. Low interest rates and steady retail prices boost the buying power of this increased cash flow.
However, consumers do continue to be concerned about weak labor market conditions and high debt levels. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched economic indicator. It is likely confidence levels will continue to fluctuate until consumers feel more certain about economic recovery.
Sources: www.conference-board.com
www.economy.com
