U.S. Consumer Confidence Drops 5.4% in June Amid Economic Fears

Consumer confidence in the United States unexpectedly declined in June, driven by widespread concerns over the economic outlook, labor market conditions, and personal financial prospects. These concerns stemmed largely from trade policies and their potential impact on the economy.

The Consumer Confidence Index fell by 5.4 points to 93, marking a significant drop that caught all surveyed economists off guard. The index, which reflects consumer expectations for the next six months, decreased by 4.6 points to 69, while the present situation index dropped by 6.4 points to 129.1. This decline nearly erased half of the previous month's rebound, highlighting ongoing consumer anxiety about the potential economic impact of increased import tariffs. Despite moderate inflation over the past three months, some consumers have become more cautious in their spending.

According to a senior economist, consumers' views on current business conditions were less optimistic than in May. Their assessments of current job opportunities have weakened for the sixth consecutive month but remain in positive territory, aligning with the still robust labor market conditions. The survey was conducted up to June 18, five days after Israel launched a series of strikes on Iranian targets. However, mentions of geopolitical issues in the responses only slightly increased.

The survey also revealed that the proportion of consumers expecting interest rates to rise in the next year reached 57%, the highest level since October 2023. This increase in expectations reflects growing concerns about the economic environment and the potential for higher borrowing costs, which could further dampen consumer spending and economic growth.