Consumer confidence declined slightly in August, according to the latest data from The Conference Board. The Consumer Confidence Index decreased 0.8 points to 89.4, down from 90.2 in July. Meanwhile, the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose 6.8 points to 121.2, following three consecutive months of declines.
Net views of current business conditions, the share saying conditions are “good” versus “bad,” rose slightly by 0.1 percentage point to plus 1.3 percent. Perceptions of current employment conditions improved significantly, with the labor market differential, the share of consumers saying jobs are “plentiful” minus the share saying jobs are “hard to get,” rising 4.8 percentage points to plus 7.5 percent. The increase was largely driven by more consumers reporting that jobs are “plentiful” in August, while the share saying jobs are “hard to get” declined.
“Consumer confidence moderated slightly in August for a second consecutive month,” said Dana M. Peterson, chief economist, The Conference Board. “The Expectations Index slipped further into negative territory, which was offset by a moderate rise in the Present Situation Index after declining in the past three months. Consumer appraisals of current business conditions were mildly positive. Perceptions of the current labor market improved, reversing three months of moderate decline. Looking ahead, consumers were more pessimistic about business conditions and the labor market over the next six months. Expectations for household incomes moderated but remained optimistic overall.”
The Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, fell 5.8 points to 68.2. The Expectations Index declined in August, with all three of its components deteriorating. Net expectations for business conditions dipped 2.5 percentage points to minus 6.3 percent. Net expectations for the labor market softened 2.6 percentage points to minus 11.5 percent, while net expectations for household income fell 3.1 percentage points but remained in positive territory at plus 3.8 percent.
On a six-month moving average basis, confidence across all age groups trended down slightly, remaining highest among consumers under 35. By income, confidence was mixed, but generally higher-income groups were more optimistic. By generation, confidence among Gen Z remained the highest, followed closely by millennials on a six-month moving average basis. The three oldest generations—Generation X, baby boomers and the Silent Generation—trailed in confidence by a wider margin. By political affiliation, confidence among independents and Republicans softened, while Democrats were somewhat more positive in August.
Consumers’ average and median 12-month inflation expectations were slightly higher in August. Most consumers still anticipated higher interest rates over the next 12 months, down moderately from 62 percent in July. Meanwhile, consumers continued to expect higher stock prices a year from now.
Consumers’ net views of their family’s current financial situation softened slightly in August after improving the previous month, as the share of consumers who said their finances were “bad” rose. Views of their family’s future financial situation remained healthy but were slightly less optimistic in August compared with June and July.
While the share of consumers who said a U.S. recession over the next 12 months is “very likely” ticked up, consumers still perceived a low likelihood of a recession over the next 12 months. These measures are not included in calculating the Consumer Confidence Index.
On a six-month moving average basis, auto purchasing expectations remained strong. Homebuying expectations declined slightly for the month but maintained an upward trend after slumping to decade lows in early 2024. Among consumers’ planned purchases of durable goods within six months, furniture and smartphones remained the most desired items, although expectations for smartphones continued to moderate in August. Spending plans for televisions fell the most on a six-month moving average basis, while plans for most other durable goods moderated slightly.
Anticipated spending on services pared back in August after a jump in most discretionary activities last month, as lower gas prices and the summer’s World Cup likely boosted consumers’ desire to spend in July. Despite this, consumers still planned to spend more overall on services over the next six months.
Among all service categories, restaurants, bars and takeout; utilities; and streaming, internet and mobile services ranked among the top three spending targets, while planned spending on beauty and personal care fell. Beyond the top three, consumers anticipated spending less on many activities within the next six months, including movies, hotels for personal travel, airfare, amusement parks, and museums and historical sites, although spending plans for pet care remained strong.
Consumers’ views of current business conditions improved slightly in August. The share of consumers who said business conditions were “good” edged down to 18.9 percent, from 19.1 percent in July, while the share who said conditions were “bad” also declined, falling to 17.6 percent from 17.9 percent.
Consumers’ views of the labor market improved in August, recovering to levels last seen in April. The share of consumers who said jobs were “plentiful” increased to 27.0 percent, up from 24.4 percent in July. At the same time, the share who said jobs were “hard to get” declined to 19.5 percent, from 21.7 percent in July.
Despite the improvement in views of current conditions, consumers were less optimistic about the outlook for business conditions over the next six months. The share expecting business conditions to improve fell to 16.8 percent in August, from 17.8 percent in July, while the share expecting conditions to worsen increased to 23.1 percent, from 21.6 percent.
Consumers also became more negative about the labor market outlook. The share expecting more jobs to be available six months from now declined to 14.6 percent, from 16.4 percent in July. Meanwhile, 26.1 percent anticipated that fewer jobs would be available, up slightly from 25.3 percent the previous month.
Consumers’ outlook for their own income prospects was also less optimistic in August. The share expecting their income to increase fell to 17.6 percent, from 19.5 percent in July, while the share expecting their income to decline rose to 13.8 percent, from 12.6 percent.
