US consumer confidence unexpectedly declined in June, underscoring lingering anxiety about the potential impacts on the economy and job market from higher US import duties.
The Conference Board’s gauge of confidence decreased 5.4 points to 93, data showed Tuesday. The figure was below all estimates in a Bloomberg survey of economists.
A measure of consumer expectations for the next six months dropped 4.6 points, as the share of respondents anticipating better business conditions fell by the most in more than two years. The gauge of present conditions fell 6.4 points.
The retreat in confidence erased nearly half of the prior month’s rebound that was due to a temporary agreement between the US and China to roll back extreme tariffs. This month’s retreat suggests consumers will remain guarded about their spending.
“In this kind of environment, it’s not surprising that consumers are hesitant to make big purchases,” Heather Long, chief economist at Navy Federal Credit Union, said in a note. “They are sitting on the sidelines and only buying homes, cars and appliances if they absolutely must. This is an ‘abundance of caution economy.’”
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The cutoff date for the Conference Board survey was June 18, five days after Israel launched a series of strikes on Iranian targets. References to geopolitics increased only slightly in write-in responses, according to the survey. Tariffs remain top of mind among those surveyed.
The share of consumers that said jobs were plentiful dropped to 29.2%, the smallest in more than four years. The share saying jobs were hard to get eased slightly. The difference between these two — a metric closely followed by economists to gauge the job market — fell to 11.1 percentage points, also the lowest since March 2021.
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Federal Reserve Chair Jerome Powell told lawmakers Tuesday that the overall job market and economy remain solid. He also conveyed that policymakers are in no rush to lower interest rates as they wait for more clarity on trade policy.
A smaller share of consumers said they expected their incomes to rise in the next six months. At the same time, expectations about personal finances remained largely solid, the group said, likely reflecting a rebound in US equity markets and the outlook for stocks.
Buying plans
Buying conditions for big-ticket items like appliances and electronics were mixed. Car-buying plans were unchanged, while fewer respondents indicated they planned to purchase a home. US retail sales declined for a second month in May as shoppers pulled back from a pre-tariffs spending splurge earlier in the year.
The share of consumers expecting higher interest rates in the year ahead increased to 57%, the highest since October 2023, the Conference Board data showed.
Consumers have largely become less confident since the Trump administration doubled down on its tariffs strategy aimed at correcting trade balances, reshoring manufacturing and bolstering the national industrial base.
What Bloomberg Economics says...
Businesses have had difficulty keeping pace with changing tariffs schedules. While steep tariffs with a large number of US trading partners were announced in early April, the administration delayed the higher duties until July. In addition, many companies are contending with sectoral duties such as those on aluminium and steel.
Recent survey data have shown US manufacturers are facing higher input costs and passing most of the increases on to customers.
