• Income gains, employment and general economic prosperity support confidence
  • Decline in Q2 GDP not impacting sentiment
  • Low inflation and falling interest rates are positive consumer trends

The Conference Board, a private business organization, will release its Consumer Confidence Index for June on Tuesday June 25th at 10:00 am EDT, 14:00 GMT.


The Consumer Confidence Index is predicted to fall to 131.2 in June from 134.1 in May. The Present Situation Index in May was 175.2 up from 169.0 in April. The Expectations Index rose to 106.6 in May from 102.7 the prior month.


US labor economy

The job market and compensation remain the most important factors supporting overall satisfaction with the US economy reflected in the consumer confidence levels.  

Payroll creation has cooled in the last four months. February’s 56,000 brought the first quarter average down to 174,000 from 233,000 in the final three months of 2018 and 245,000 in January. April and May, 224,000 and 75,000, averaged just 150,000. June is expected to be 165,000.


 It is uncertain whether these two months are part of the normal variation in payrolls or are the beginning of a slackening in the production of new employment.  There have been three other months below 100,000 in the past three and a half years.  June’s payrolls will help establish the answer.

Either way two weak months out of four are too recent to have had an impact on consumer sentiment.  Other labor indicators remain strong.  Initial jobless claims are near a five decade low. Annual wage growth averaged 3.30% in the fourth quarter, 3.27% in the first quarter and 3.15% in April and May. All are at or near decade highs.  


Unemployment has been at a 50 year low of 3.6% for two months and at or below 4% for 15 months. It is expected to sustain in June. If it does it will be the longest period for minimum unemployment since 1968 and 1969.

Business, GDP and inflation

Business hiring optimism in manufacturing and services regained some of its verve in May after falling for more than six months from last year’s exceptionally buoyant levels. 

The service sector employment index jumped to 58.1 in May from 53.7 in April with a 3-month moving average of 55.9, it returns to some of the best levels of the past two years.  The manufacturing employment index rose more modestly to 53.7 last month from 52.4, and its 3-month average of 54.57 remains at the lower range of the past two years.  



It may be that the lower than expected job numbers in the first four months and the diminution of manufacturing hiring were a product of declining optimism, itself a likely victim of the trade dispute with China. The manufacturing sector is expected to add just 2,000 workers in June and has largely stopped hiring with the 3-month moving average falling from 25,000 last November and December to 2,000 in May.


Again the June payroll numbers will indicate if business executives have returned to last year’s outlook or shifted to a more moderate inclination.

The economic expansion also seems to have slowed in the second quarter from the 3.1% rate in January, February and March. The Atlanta Fed GDPNow model is tracking at 2.0% with an update due on Wednesday June 26th after US durable goods orders.

Inflation may be of concern to the Federal Reserve but for the consumer slowly rising prices are a benefit. With the PCE Index at 1.5% annually in May and the core index at 1.6% there is little in them that might discourage the consumer.


Michigan Consumer Sentiment

The other major consumer sentiment survey from the University of Michigan confirms the resilient aspect of US households.  At 100 in June it has the fourth highest post-recession score. It has recovered from the shutdown induced plunge to 91.2 in January and compares favorably with the best results of the past two decades.  


Consumer Confidence

The US economy has performed exceptionally well over the past two years bringing prosperity to groups and communities largely left out of the post-recession recovery.

It is not a mystery that confidence levels have been at their best sustained marks in twenty years and those of the Conference Board have been among the strongest in the 52 year history of the survey.

With the job market continuing to produce new jobs, even if the rate may have slipped somewhat this year, with wages near their best levels in a decade, inflation quiescent, interest rates low and a roaring equity market there is little on the consumers’ horizon to dampen optimism.

The China trade dispute, the global economic slowdown, Brexit or some unknown problem may yet impinge on the American consumers’ happy summer but for the time being, sunshine is in plentiful supply.

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