Although the Conference Board said consumer confidence rose in June, because of when the survey was conducted, it doesn’t actually reflect what might be the sentiment following Brexit.
The Conference Board said Tuesday that its Consumer Confidence Index, which fell in May, improved in June and now stands at 98. The Index in May was down to 92.4. Both components of the Index saw gains in June. The present situation part rose to 118.3 from 113.2, while the expectations portion increased to 84.5 from 78.5.
Lynn Franco, director of economic indicators at the Conference Board, said, “Consumers were less negative about current business and labor market conditions, but only moderately more positive, suggesting no deterioration in economic conditions, but no strengthening either.”
Franco added that expectations over business and labor market conditions, as well as personal income prospects improved slightly, while consumers “remain optimistic about economic growth in the short term.”
The cutoff date for the preliminary results was June 16. The survey, which is essentially a backwards indicator of how consumers feel prior to June 16, doesn’t take into account any changes in sentiment since the Brexit vote on Thursday, when U.K. citizens voted to leave the European Union.
Chris G. Christopher, director of consumer economics at IHS Global Insight, said on Tuesday that any impact on sentiment wouldn’t be reflected until July’s report. He is expecting the consumer mood to take a hit in July.
“When households look at their shrinking 401(k)s and hear the headline news that the global and U.S. financial systems are under threat, consumer mood heads South,” the economist predicted.
In a telephone interview, Christopher said U.S. consumers could end up getting a benefit on the shopping front. That’s because as the U.S. dollar gets stronger, imports will be cheaper. “While retailers may not like that, consumers at least might benefit from lower apparel prices,” the economist said.
Despite the stock markets’ recent activity, his outlook for the second quarter real consumer spending growth is still at 3.7 percent, “significantly stronger than the first quarter’s 1.5 percent reading,” he said.
For the June report, consumers who said business conditions are “good” rose slightly to 26.9 percent from 26.1 percent, while those who said conditions are “bad” fell to 17.7 percent from 21.4 percent. The current assessment of the labor market was “mixed,” with those claiming jobs are “plentiful” slipping to 23.4 percent from 24.5 percent and those who said jobs are “hard to get” falling to 23.3 percent from 24.5 percent.
Over the next six months, those who said conditions will improve over the next six months rose to 16.8 percent from 15 percent. And the outlook for the labor market was more favorable in June, with respondents who said they expect more jobs in the months ahead increase to 14.2 percent from 12.5 percent. Further, those who said they expect their incomes to increase rose to 18.2 percent from 16.5 percent.