Background on The Conference Board and its Consumer Confidence Index
The Conference Board, a nonprofit organization that analyzes business and economic data, publishes the Consumer Confidence Index. This index measures how optimistic or pessimistic U.S. consumers are regarding the state of the economy and their own financial situation. The index is based on two key components: consumer sentiment about the current economic conditions and their expectations for future economic performance.
Who is The Conference Board?
The Conference Board was established in 1949 and has been providing businesses, governments, and academic institutions with insights and data to help them navigate the global economy. Its Consumer Confidence Index is one of the most widely followed indicators of consumer sentiment in the United States.
Why is this index relevant?
The Consumer Confidence Index serves as a barometer for consumer spending, which accounts for about 70% of the U.S. economy. When consumers are confident, they tend to spend more, driving economic growth. Conversely, when confidence wanes, consumers may cut back on spending, potentially leading to a slowdown in economic activity.
June 2019 Consumer Confidence Index: A Dip in Sentiment
In June 2019, the Consumer Confidence Index fell unexpectedly to 93 points, marking a decrease of 5.4 points from May’s reading. This decline reflects growing concerns about job availability and the economic uncertainty caused by tariffs imposed by President Donald Trump’s administration.
Key Findings of the June Index
- Job Market Concerns: The percentage of consumers who perceived “plenty” of job opportunities dropped to 29.2%, the lowest since March 2021. Meanwhile, 18.1% of respondents found it “difficult” to find jobs, down slightly from 18.4% in the previous month.
- Income Expectations: The proportion of consumers expecting income increases over the next six months fell, contributing to heightened financial anxieties.
- Trade Tariffs Impact: Consumers remain worried about import tariffs, and most are hesitant to make high-value purchases. The survey indicated that geopolitical issues and social unrest slightly increased compared to previous months, though they remained less influential than economic factors.
Implications of the Declining Confidence Index
Tim Quinlan, Senior Economist at Wells Fargo, commented on the implications of the falling confidence index:
“The concerns over prices, combined with fewer consumers anticipating income growth, suggest that household financial anxieties remain elevated. Our forecasts still point to a stagnant second half of the year, with retail spending likely to remain subdued due to the full impact of tariffs and upcoming reductions in discretionary spending.”
Key Questions and Answers
- What caused the decline in consumer confidence? The primary reasons for the dip were heightened concerns about job availability and economic uncertainty stemming from government tariffs.
- Which demographics were most affected? The decline in confidence was observed across all age groups and income levels, with the largest drop among Republicans.
- How might this impact the broader economy? Lower consumer confidence could lead to reduced spending, potentially slowing economic growth.
- What are the implications for businesses? Businesses may need to adjust their strategies in response to potential decreases in consumer spending, focusing on cost management and efficiency.
