Consumer Confidence Rises Slightly as Gas Prices Fall

American consumer attitudes toward the economy improved modestly in June as falling gas prices eased inflation fears, though overall sentiment remains well below historical norms, according to new data released Tuesday.

Confidence Index Edges Up but Stays Below Year-Ago Levels

The Conference Board reported that its consumer confidence index rose 0.6 points to 91.2 in June — still below its reading of 95.2 a year earlier. Consumer sentiment had deteriorated sharply after the conflict with Iran triggered a spike in oil and gas prices, accelerating inflation and eroding Americans’ inflation-adjusted incomes. Before the pandemic, the index regularly exceeded 120, underscoring how far confidence has fallen.

“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” said Dana Peterson, the Conference Board’s chief economist. “Consumer appraisals of current business conditions were slightly more positive compared to last month. However, perceptions of the current labor market softened measurably.”

Spending Holds Steady Despite Pessimism

Despite the lukewarm outlook, Americans have continued to spend, helping sustain economic growth even as inflation climbed. Economists note that consumer sentiment surveys have become less reliable predictors of actual spending behavior since the pandemic.

A government report earlier this month showed consumers increased their spending in May despite elevated gas prices. Analysts expect that steady consumer spending kept the economy growing at roughly a 2.5% annual rate during the April-June quarter.

Falling Gas Prices Offer Relief

Gas prices have played a central role in the modest improvement in consumer confidence and economy data this month. Prices spiked above $4.50 per gallon nationally after the US-Iran conflict began on February 28, but have since eased to $3.85 per gallon, according to AAA. Continued declines could further boost consumer sentiment in the months ahead.

Job Market Perceptions Weaken

While overall confidence ticked up, consumers expressed growing concern about the labor market. The share of Americans who said jobs are “hard to get” rose to 22.5% in June, up from 19.8% the previous month — a notable shift in sentiment.

However, official data released Wednesday showed job openings held steady at a solid 7.6 million in May, suggesting employers remain actively engaged in recruiting despite softer consumer perceptions.

What to Watch This Week

The Labor Department is scheduled to release its June jobs report on Thursday. Economists forecast employers added 100,000 jobs last month, a solid pace of hiring, while the unemployment rate is expected to hold steady at 4.3%, according to data provider FactSet.