Consumer confidence continues to rise as the summer progresses.
The National Conference Board’s Consumer Confidence Index increased for the second consecutive month, and the index now stands at 101.4 for June—up 6.8 points from 94.6 in May. The Present Situation Index, which measures how consumers feel about current economic conditions, increased 4.5 points to 111.6. The Expectations Index, which reflects how consumers feel about economic conditions six months from now, showed a substantial improvement—it increased to 94.6, up 8.4 points from May to June.
Consumers’ assessment of current economic conditions continues to improve, which will likely lead to increased spending in the near term. The percentage of consumers saying business conditions are good increased from 24.7 percent in May to 26.4 percent in June. Consumers also appear to be more upbeat about job prospects: the percentage of people who think jobs are plentiful increased from 20.6 percent to 21.4 percent, and the percentage of people who think jobs are hard to get declined from 27.2 percent to 25.7 percent.
Consumers believe this improved economic state will continue over the next few months. The percentage of those who expect business conditions to improve over the next six months increased from 16.0 percent to 18.5 percent, while the percentage of those expecting business conditions to worsen decreased from 11.3 percent to 9.8 percent. Consumers expect this economic improvement to lead to additional jobs, as well. Those anticipating more jobs six months from now increased from 14.7 percent to 17.8 percent, and those anticipating fewer jobs six months from now declined from 16.6 percent to 15.1 percent.
U.S. Consumer Price Index
The U.S. Consumer Price Index (CPI) increased 0.5 percent from April to May on a non-seasonally-adjusted basis and has remained even over the past 12 months. The increase in the overall index was driven primarily by a sharp rise in gasoline prices—10.4 percent. Other energy price changes were mixed. The fuel oil price index went up in May while the electricity price index went down. Natural gas prices did not change from April to May.
Food prices overall did not change in May—decreases in prices for food at home were offset by a jump in prices for food away from home. The avian flu outbreak in the Midwest has not affected poultry and egg prices across the nation as much as expected, although prices are higher in the regions that were hardest hit. Similarly, the drought in California has not had a large impact on food prices.
Several price categories increased from April to May, including shelter, airline fares, medical care, personal care, recreation, and new vehicles. On the other hand, clothing, household furnishings, and used cars and trucks all decreased in price. The flat rate of inflation signals that the U.S. economy may not be ready for interest rate hikes from the Fed yet, and no official timeline has been released.