U.S. Consumer Confidence Slows in July 2025 Amid Persistent Inflation and Mixed Job Market

The Conference Board’s U.S. Consumer Confidence Index for July 2025 came in at 101.3, down from 105.7 in June, marking a modest decline in consumer sentiment. The index, which measures consumer perceptions of the current business conditions and expectations for the future, reflects a cautious outlook as households continue to navigate high inflation and a stabilizing labor market.

Current Conditions and Consumer Optimism

The Present Situation index, which assesses consumers' views on current business conditions and the job market, fell to 128.4 in July from 132.2 in June. This decline suggests that while employment remains robust, consumers are becoming more cautious about the broader economic environment. Job availability and employment expectations remain strong, with 26% of consumers reporting that jobs are “plentiful,” down slightly from 28% in the previous month.

Consumer spending patterns also showed signs of restraint. The percentage of consumers planning to make a major purchase in the next six months edged lower, reinforcing the notion that households are tightening their budgets in response to ongoing inflationary pressures.

Economic Expectations Turn Cautious

The Future Expectations index, which captures consumer sentiment about the next six months, dropped to 83.1 in July, compared to 88.2 in June. This sharper decline highlights growing uncertainty about the near-term economic outlook. Consumers are increasingly concerned about rising prices, with 16% expecting their household spending to decrease in the coming months—up from 13% in June.

Inflation remains a key concern. The average inflation expectations for the next year rose slightly, with consumers forecasting a 3.5% year-over-year increase in prices, up from 3.3% in June. This reflects continued unease about the pace of price increases, particularly for essential goods and services.

Regional and Demographic Variations

While the national index shows a slowdown in confidence, regional variations persist. Urban areas, particularly in the Northeast and Midwest, reported more pronounced declines in confidence compared to suburban and rural regions. Younger consumers (aged 18–34) showed the most significant drop in optimism, with expectations falling by nearly 10 points from June.

By income level, higher-income households maintained relatively stable confidence levels, while middle- and lower-income consumers reported sharper declines. This trend underscores the uneven impact of inflation and wage growth across different segments of the population.

Market and Policy Reactions

The release of the Consumer Confidence data occurred against a backdrop of ongoing Federal Reserve policy deliberations. With inflation still above the central bank’s 2% target, the data adds to the pressure for continued monetary caution. While the Fed has signaled a potential pause in rate hikes for the remainder of the year, the slowdown in consumer sentiment could influence its decision-making in the coming months.

Investors reacted cautiously to the data, with equity markets showing mixed performance. Sectors tied to consumer discretionary spending saw modest declines, while defensive sectors held relatively firm.

Looking Ahead

The July 2025 data underscores the evolving nature of consumer sentiment in a high-inflation environment. While the labor market remains resilient, the cooling of consumer confidence highlights the need for continued fiscal and monetary policy support to sustain economic momentum. Policymakers will be closely watching the next round of data to gauge whether the current trend is a temporary dip or a more persistent shift in consumer behavior.