KPI – July 2024: State of Manufacturing
KPI – July 2024: State of Business – Automotive Industry
KPI – July 2024: State of the Economy
KPI – July 2024: Recent Vehicle Recalls
Below is a synopsis of consumer confidence, sentiment, demand and income/spending trends.
The Conference Board Consumer Confidence Index® decreased to 100.4 (1985=100) in June, down from 101.3 a month prior. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased to 141.5 (1985=100) compared to 140.8 last month. Meanwhile, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – dropped to 73.0 (1985=100), down from 74.9 in May. The Expectations Index continues to sit below 80, which historically signals a recession ahead.
“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, confidence could weaken as the year progresses,” says Dana Peterson, chief economist at The Conference Board.
While Peterson notes “there was no clear pattern” this month, data shows the overall decline in confidence was centered on consumers aged 35-54. Conversely, those under 35 and older than 55 posted an improvement in confidence. On a six-month moving average basis, confidence continued to be highest among those under 35 and those making over $100K.
According to a supplemental survey question, consumers pointed to elevated price levels, especially in food and groceries, as having the greatest impact on their view of the U.S. economy. The labor market and U.S. political division also were top of mind. In addition, consumers were less optimistic about their family’s financial situation, both currently and over the next six months.
The University of Michigan Survey of Consumers – a survey consisting of approximately 50 core questions covering consumers’ assessments of their personal financial situation, buying attitudes and overall economic conditions – finished at a dismal 68.2 in June, following a poor performance in May. Both year-ahead and long-run inflation expectations are hovering 2.9%. According to preliminary reports, sentiment dipped to 66.0 at the beginning of July.
“Although sentiment is more than 30% above the trough from June 2022, it remains stubbornly subdued. Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead,” says Joanne Hsu, director of Survey of Consumers. “With the upcoming election, consumers perceived substantial uncertainty in the trajectory of the economy, though there is little evidence that the first presidential debate altered their economic views.”
Consumer Income & Spending
According to the U.S. Bureau of Economic Analysis (BEA), in May 2024 personal income increased $114.1 billion (0.5% at a monthly rate), while disposable personal income – personal income less personal current taxes – climbed $94.0 billion (0.5%) and personal consumption expenditures (PCE) increased $47.8 billion (0.2%).
In addition, personal outlays – the sum of personal consumption expenditures, personal interest payments and personal current transfer payments – rose $56.4 billion in May. Personal saving registered $744.5 billion and the personal saving rate – personal saving as a percentage of disposable personal income – was 3.9%.
Important Takeaways, Courtesy of BEA:
- In May, the $47.8 billion increase in current-dollar PCE reflected a boost of $34.2 billion in spending for services and $13.6 billion for goods. Within services, the largest contributors to the increase were health care (led by hospitals), housing and utilities (led by housing), plus transportation services (led by air transportation). Within goods, the rise primarily reflected an increase in other nondurable goods (led by prescription drugs), which was partly offset by a decrease in gasoline and other energy goods.
- Overall, the PCE price index for May increased 2.6% year-over-year. Prices for goods decreased 0.1%, while prices for services increased 3.9%. Food prices increased 1.2% and energy prices increased 4.8%.
