Consumers experienced a slight increase in confidence in the month of July
In July 2021, consumer confidence showed signs of stabilization, with the Consumer Confidence Index rising to 97.2, up from 95.2 in June. However, this figure remains below the high levels seen before the pandemic.
According to The Conference Board, the Expectations Index, which gauges consumers’ short-term outlook on income, business, and labor market conditions, increased by 4.5 points to 74.4. Despite this gain, the Expectations Index has remained below the recession-indicative threshold of 80 for a sixth consecutive month, indicating persistent recessionary concerns.
Stephanie Guichard, Senior Economist at The Conference Board, stated that consumers are regaining some confidence in future conditions, particularly regarding business prospects, employment, and personal income. However, overall confidence remains below the high levels seen in the previous year.
The Present Situation Index, which reflects consumers’ current views of business and labor market conditions, fell by 1.5 points to 131.5. This decline was partly due to a weakened view of current job availability, which declined for the seventh consecutive month to its lowest level since March 2021. A growing share (18.9%) of consumers reported jobs were "hard to get" in July, the highest percentage since March 2021.
Consumers' economic concerns in July included tariffs and their potential impact on prices and the economy. The survey respondents noted these as a point of worry. Other areas of concern were inflation and recent legislative developments.
Interestingly, a slightly larger share of consumers expressed interest in traveling abroad. However, consumer spending intentions for cars and homes declined in July. Dining out, travel, and lodging all saw declines in consumer spending intentions, with spending intentions for services weakening for the second month in a row.
The 12-month inflation expectations slightly dropped, offering a glimmer of hope amidst the economic concerns. More consumers (30.2%) said jobs were "plentiful" in July compared to June (29.4%).
The "Big Beautiful Bill" passed by Congress was a point of contention, with opinions divided. The bill's impact on consumer confidence and spending remains to be seen.
This data indicates a cautious consumer mood with stabilized but subdued confidence and persistent concerns about employment and economic pressures such as tariffs, inflation, and legislative developments, which could continue to influence economic outlooks.
Sources: PR Newswire, National Jeweler, The Conference Board, Home News Now; data as of July 29, 2021.
Business confidence among consumers showed a slight progression, with consumers regaining some optimism about future prospects such as business, employment, and personal income. However, the finance sector remains cautious due to persistent concerns about employment, economic pressures like tariffs, inflation, and legislative developments.
