Consumer Confidence Declines As Worries Over Economy Persist

Consumers are slightly more concerned over the economy this month as they assess current business and labor market conditions, according to data released Tuesday.

The Conference Board said its Consumer Confidence Index dipped from 101.3 in May to 100.4 in June, while its Present Situation Index — based on consumers' gauge of current business and labor market conditions — improved from 140.8 last month to 141.5 in June.

But the nonprofit entity’s Expectations Index, which tracks consumers' short-term outlook for income, business and labor market conditions, fell from 74.9 in May to 73.0 in June. It has stayed below 80, the threshold which usually signals a recession ahead, for five straight months, the board said.

"Confidence pulled back in June but remained within the same narrow range that's held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future,” Dana M. Peterson, the board’s chief economist, said in a statement.

“However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses.”

She said consumers “expressed mixed feelings this month” as their view of the present situation improved slightly as sentiment on the current labor market rose, but their assessment of current business conditions cooled.

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“Meanwhile, for the second month in a row, consumers were a bit less pessimistic about future labor market conditions,” she added.

“However, their expectations for both future income and business conditions weakened, weighing down the overall Expectations Index.”

The decline in confidence between May and June centered on consumers aged 35 to 54, according to Peterson.

“By contrast, those under 35 and those 55 and older saw confidence improve this month,” she said.

“No clear pattern emerged in terms of income groups. On a six-month moving average basis, confidence continued to be highest among the youngest (under 35) and wealthiest (making over $100K) consumers."

Consumer spending has been “the driving force” behind this economic expansion, but there are concerns about the consumer's willingness and ability to continue parting with money, Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said about the June Consumer Confidence Index.

“The drop in consumer confidence isn't welcome news from that perspective,” he said on Tuesday.

“Ultimately, we believe the bull market we are in isn't going to be derailed until either we go into recession or the Fed changes interest rate policy from potential cuts to actual hikes, so just expect volatility between now and the end of the year, but don't expect the bull market to end without a change in the economy or Fed posture.”

Price action: Walmart Inc. (NYSE:WMT) dropped 2.53% by mid-day on Tuesday, while Amazon.com, Inc. (NASDAQ:AMZN) gained 1.13%. Home Depot Inc (NYSE:HD) declined 4.01%.

SPDR S&P Retail ETF (NYSE:XRT) slipped 0.96% by mid-day Tuesday as VanEck Retail ETF NASDAQ: RTH) fell 0.90% and Amplify Online Retail ETF (NYSE:IBUY) gained 0.61%.

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