Consumer Surveys Show Confidence Remains High, Though Economic Worries Continue

Consumers’ confidence remains at a fairly high level, but they were a bit less optimistic in July than a month or year ago, according to separate surveys from the University of Michigan’s Surveys of Consumers and the Conference Board’s Consumer Confidence Survey.

According to the UM Surveys, the recent decline is attributed to rising concerns, mainly expressed by upper-income households, about prospects for the economy. Uncertainties about the global economy and the presidential election have heightened consumers’ cautiousness in their expectations for future economic and employment growth.

The Sentiment Index was 90 in the July survey, down from 93.5 in June and last July’s 93.1. Most of the decline was due to the Expectations Index, which fell to 77.8, down from 82.4 in June and 84.1 in July 2015. The gap between the Expectations Index and the Current Conditions Index—which fell to 109 in July from last month’s cyclical high of 110.8— is now averaging its largest difference over the past three months since its last peak in 2006.

“The enduring strength in consumer sentiment during the past 18 months has been in personal finances and buying conditions, while the outlook for the economy and job creation has gradually weakened,” states Richard Curtin, the surveys’ chief economist. Yet rather than portend an impending downturn, he added, “it may reflect nothing more than lackluster growth during the past seven years and an unusual degree of economic uncertainty.”

Things were even calmer in the Conference Board’s Consumer Confidence Survey, which had increased in June to 97.4, and remained relatively unchanged in July, standing at 97.3. The present Situation Index increased from 116.6 to 118.3 while the Expectations Index edged down to 83.3 in July, from 84.6 in June.

Consumer confidence held steady in July after improving in June. Although consumers’ optimism regarding the short-term outlook was slightly less favorable in July, they were more positive about current business and labor market conditions, suggesting the economy will continue to expand at a moderate pace, according to Lynn Franco, director of Economic Indicators at The Conference Board.

The monthly survey is conducted by Nielsen.