Inflation? Yes, but keep calm and carry on: Such was U.S. consumers' sentiment in June, according to The Conference Board's latest Consumer Confidence Index, released June 29.
Consumer confidence increased in June for the fifth consecutive month and now stands at its highest level, 127.3, since the COVID-19 pandemic began in March 2020. In addition, consumers' expectations for business conditions and their own financial prospects in the next six months improved after their short-term business outlook dipped in May.
Fewer consumers expecting business conditions to worsen in the next six months and more consumers expecting their income to rise helped fuel the boost in The Conference Board's Expectations Index. Consumers do see inflation coming down the pipeline—but so far, it isn't affecting their spending plans.
"While short-term inflation expectations increased, this had little impact on consumers' confidence or purchasing intentions," said Lynn Franco, senior director of economic indicators for the not-for-profit Conference Board, in a news release. "In fact, the proportion of consumers planning to purchase homes, automobiles and major appliances all rose—a sign that consumer spending will continue to support economic growth in the short term." Vacation intentions also rose, she noted, suggesting continued expansion of services spending.
In June, 24.5% of consumers said current business conditions are good, an improvement from the 19.9% who said the same in May. More than half, 54.4%, said jobs are plentiful, up from 48.5% in May.
Looking ahead, fewer consumers in June were optimistic about continued job growth: 25.7% said they expect more jobs to be available in the next six months, vs. 27.7% who said the same in May. But a larger share of consumers in June (18.6%) than in May (16.2%) said they expect their income to increase in the coming months, and the share who expect their income to decline fell slightly, to 8.5% from 9.3%.