In June, the CCI, an important economic barometer of consumer spending, took its highest one-month plunge in the history of the index’s existence. It dropped by 5.4 points, settling at an index of 93. This decline marks an overall worsening in consumer sentiment, demonstrating a deepening unease about the state of today’s economy. In its announcement of the CCI, The Conference Board, which publishes the CCI, noted that this trend represents an ongoing drop in consumer optimism.
The Present Situation Index fell dramatically 6.4 points in the June report, now resting at 129.1. At the same time, Expectations Index decreased, dropping 4.6 points to 69. This decline suggests that consumers are increasingly pessimistic about not only the present but the near future of the economy. Consumers have been souring on jobs for six months in a row. Their perspectives remain very rosy on balance.
The consequences of this drop go deeper than America’s consumer confidence. In the wake of this report, the US Dollar Index came under significant bearish pressure. It fell 0.55% on the day to close at 97.80. The index is still deep in negative territory, trading below the key level of 98.00. Analysts are interpreting this as a sort of direct counter to those cratering consumer confidence numbers.
Stephanie Guichard, Senior Economist for Global Indicators at The Conference Board, noted the change in consumer attitudes.
“Consumers were less positive about current business conditions than May.” – Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.
These results, reported in June’s Consumer Confidence Index, present a worrisome picture for the state of the US economy. Consumers are more pessimistic about present business conditions than they were in May. Yet this declining confidence threatens to have damaging effects on bursts of future economic growth.
Consumers are reassessing their financial prospects. The decline in both the Present Situation and Expectations indices underscores this change in tone, reacting to recent economic developments. Such worried mood can be heard with continued high inflation pressures and unknowns around the stability of jobs.
While these challenges may be daunting, consumers’ overall view of job prospects continues to be a bright spot. The very slight move back to positive ground shows there is still a spark of optimism among consumers, despite their confidence continuing to fade.
Consumer confidence will be essential in restoring economic activity. These are likely to be scrutinized even more by policymakers and economists following the most recent figures. The loss of consumer spending, a massive and unquantifiable burden risked by a new and fragile economic recovery, is a deep concern.