U.S. Consumer Sentiment Declines in July as Views on Business and Job Market Worsen

U.S. consumer confidence dropped in July, as households grew more pessimistic about current business conditions and the labor market.

Data released Tuesday by the Conference Board showed the consumer confidence index fell 1.4 points to 90.8, following an upward revision to the previous month's reading. The result was below the median estimate of 92.4 from a Bloomberg survey of economists.

The gauge measuring current conditions slumped to its lowest level since 2021, while the index reflecting expectations for the next six months held steady. Elevated gasoline and food prices are likely pressuring American households, further highlighting widespread concerns over persistent inflation and rising living costs.

Meanwhile, hiring activity has shown signs of slowing after a strong spring. The Conference Board's survey revealed that consumer views on the job market weakened in July. The proportion of respondents who said jobs were plentiful fell to 24.6%, while the share of those finding jobs hard to get also declined slightly.

The gap between these two figures, a metric closely watched by economists, narrowed to its smallest since 2021, suggesting a more challenging labor market environment for job seekers. The survey covered the period from July 1 to July 22. During this time, gasoline prices at U.S. filling stations initially fell to the lowest since March before rebounding as oil prices rose due to renewed conflict between the U.S. and Iran.

Market sentiment stabilized and oil prices eased after the U.S. paused airstrikes over the weekend. The report noted that while the frequency of mentions of gasoline prices by respondents declined, related concerns remain elevated. Comments from respondents about grocery prices, however, increased.

Looking ahead, respondents in the Conference Board survey were more pessimistic about business conditions in the coming months, while their outlook on the labor market was slightly more optimistic. Despite concerns over the cost of living and the job market, U.S. consumers continue to spend.

Retail sales grew for the fifth consecutive month in June, and economists expect consumer spending helped drive second-quarter economic growth. Tuesday's report also showed that U.S. consumers plan to continue purchasing major items and increasing spending on things like dining out over the next six months. Travel intentions also showed signs of recovery.

The U.S. Commerce Department is scheduled to release second-quarter gross domestic product data on Thursday, along with figures for June consumer spending, income, and inflation.