Consumer confidence in the United States dropped to its lowest point in 16 months. The Conference Board reported that its consumer confidence index fell to 98.7 in June from 103.2 in May, the lowest level since February 2021 and the second consecutive monthly decrease.
American consumers expressed a more pessimistic view of the future economic outlook as the expectations index fell to 66.4, the weakest reading since Mar-13.
As a forward-looking indicator, the weaker consumer confidence points towards weaker momentum in the latter part of the year as Americans are more worried about inflation, particularly due to higher fuel and food prices, says MIDF.
Nevertheless, the perception on the present economic situation was relatively unchanged from previous month, despite less favourable assessment on current business conditions and mixed views on the labour market.
Similar to the decline in University of Michigan consumer sentiment in Jun-22, The weaker confidence signals consumers would hold back their spending plans, especially for big-ticket items.
“We expect near-term sentiment and spending activities will continue to be influenced by the high inflation and rising borrowing cost, with the US Fed to continue tightening its monetary policy.”
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—declined marginally to 147.1 from 147.4 last month.
The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased sharply to 66.4 from 73.7 and is at its lowest level since March 2013 (Index, 63.7).
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