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U.S. consumer confidence fell in June amid economic concerns, although families were optimistic about the labor situation and expected inflation to fall next year.
In the mixed Conference Board survey on Tuesday, consumers’ projected likelihood of a 12-month recession fell this month after rising in April and May.
Despite fewer people buying cars and appliances in the next six months, more planned vacations. Despite the Federal Reserve’s 2022 and 2023 interest-rate hikes to curb inflation, labor-market resiliency is fueling consumer spending, supporting the economy.
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“The mild drop in confidence isn’t significant and we think there are enough tailwinds to keep consumers spending,” said Nationwide financial market economist Oren Klachkin. “The economy is on a glide path to normalized conditions.”
This month’s Conference Board consumer confidence index fell to 100.4 from a revised 101.3 in May. A Reuters survey of economists predicted a drop from 102.0 to 100.0.
Low confidence was centered in 35-54 year olds. Under 35 and 55+ consumers gained confidence.
Consumers kept politics in mind, but fewer believed the November presidential election will affect the economy than in 2016. That was slightly greater than in June 2020, before the last presidential election.

On a six-month moving average basis, confidence was strongest among under-35s and those with yearly incomes over $100,000, according to the Conference Board.
“Confidence remained within the same narrow range that’s held throughout the past two years, as current labor market views outweighed future concerns,” said Conference Board chief economist Dana Peterson. “However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses.”

The labor-market gap, based on respondents’ views on job availability, rose to 24 from 22.7 in May.
The Labor Department’s unemployment rate matches the metric. The unemployment rate rose to 4% in May for the first time since January 2022, easing labor-market conditions.
From 5.4% in May, consumers’ 12-month inflation estimates declined to 5.3%. The Conference Board said write-in responses showed rising food and grocery prices continued to impair consumers’ economic outlook.
Consumers planned to buy cars and big-ticket items like laundry dryers and TVs dropped over the following six months. Washer purchases increased while refrigerator purchases remained constant.
More people planned vacations than in April, mostly domestically and by plane. No association exists between consumer confidence and expenditure.
“While a weakening in confidence does not bode well for consumption going forward, sentiment has been depressed for some time even as households have continued to spend,” said High Frequency Economics chief U.S. economist Rubeola Farooqi.
A fourth month of poor homebuyer activity continued. Since residential investment grew double-digits in the first quarter, hard data on home development and sales show the housing market regressing.
Higher mortgage rates and home prices reduce demand. The Federal Housing Finance Agency reported Tuesday that single-family home prices gained 0.2% in April after being steady in March. As of April, housing prices rose 6.3% after rising 6.7% in March.
House-price appreciation may halt if affordability reduces housing demand and increases supply. The National Association of Realtors reported this week that May house inventories reached a two-year high.
The average 30-year fixed mortgage rate touched a six-month high of 7.22% in early May, according to Freddie Mac. Though it dropped to 6.87% last week, it is above the 6.67% average from previous year.
April house prices rose in all nine census regions, especially in New England and the Middle Atlantic.