US consumer confidence remains stable in June; sentiment, spending to benefit if job growth rebounds

The US consumer confidence index dropped marginally to 94.3 in June from 94,7, according to the University of Michigan’s preliminary index. This is less than the consensus expectations of 94. Present conditions reached a new post-recession high of 111.7, as compared to previous 109.9. They continue to be resilient. Expectations of consumers fell to 83.2 after rising sharply in May. The biggest change in the consumers’ outlook from the end of May to early June was the fall in inflation expectations.

The long-term expectations’ index that gauges where consumers see prices moving in the next five to ten years dropped 2.3 percent, as compared to the previous 2.5 percent. The June figure was the lowest on record. Last week, Fed Chair Janet Yellen stated that certain measures of “longer-term inflation expectations have moved a little lower in the last few years”. June’s movement might worsen those worries.

In the survey results elsewhere, present personal finances remained at 123, while the near-term economic outlook also was unchanged at 107. Meanwhile, expected personal finances and the longer-term economic outlook dropped from their May’s print to 125 and 101 respectively. However, both the indices are more than the April’s readings.

Moreover, buying conditions for durables rose to the December’s peak. Stable consumer confidence underpins the view that deceleration in job growth in May was not a reflection of a wide-based downturn throughout the economy. If the job growth rebounds, consumer spending and confidence are expected to be major beneficiaries, said Barclays in a research report.