Consumers aren’t as optimistic about the economic growth prospects six months out.
The Present Situation Index was relatively flat at 161.1 compared with 161.2 last month. It was the Expectations Index, which measures short-term outlook, that fell to 103.2 this month from 107.2 in May.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumers’ assessment of present-day conditions was relatively unchanged, suggesting that the level of economic growth remains strong. While expectations remain high by historical standards, the modest curtailment in optimism suggests that consumers do not foresee the economy gaining much momentum in the months ahead.”
This month’s reading was a combination of mixed messages. Consumers’ feelings about the labor market largely determines their outlook on the economy.
Looking at the short-term outlook, the percentage of consumers expecting business conditions to improve fell to 21.4 percent from 23.3 percent. Yet, their outlook for the labor market was slightly better with 20 percent expecting improvement, up from 19.7 percent last month. Still 9.8 percent expect business conditions to worsen, a reading that rose from 7.8 percent in May. And consumers who said they expect an improvement in their short-term income prospects also declined, down to 18.8 percent from 21.4 percent in May.