Consumer confidence is strong, but it’s beginning to soften.
Consumer confidence dropped from 98.4 in June to 95.7 in July, The Conference Board reports, with the measuring of how Americans feel about the economy dipping just below the pivotal 100 level. Last July, the consumer confidence was at 129.1. Any rating above 100 is considered a positive outlook.
To provide some perspective, during the 2009 recession, consumer confidence dropped as low as 25, a record low number.
The Conference Board Senior Director of Economic Indicators Lynn Franco says that inflation and media reports about potential recession are sapping consumers of their confidence.
What’s more, news reports that the Federal Reserve will likely hike interest rates today is also a major drag on the consumer outlook.
The Conference Board reported that consumers who had a positive view of current business conditions also fell in July. Previously, 19.5% of consumers had a positive view of business conditions. Now the number has fallen to 17%.
In the short term, consumers had a more varied view of the future. About 14% of consumers expect business to improve, down from 14.7%, but 27.2% also expected it to worsen, down from 29.7%.
Consumer prices have risen 9.1% since last year, the largest increase since November 1981, and mortgage rates have nearly doubled from 3% to 5.75% since March. Rising prices put added pressure on American consumers.
