U.S. Consumer Confidence Edges Higher as Gas Prices Fall

• Americans' attitudes toward the economy improved slightly in June as gas prices declined, although their outlook is still mostly negative by historical standards. The Conference Board's consumer confidence index rose 0.6 points to 91.2 but remained below 95.2 a year earlier and well below pre-pandemic levels, when the index regularly exceeded 120.
• Consumer confidence has been recovering only slowly from the impact of the U.S.-Iran conflict, which caused oil and gas prices to spike, accelerated inflation, and reduced inflation-adjusted incomes. Dana Peterson, Chief Economist at the Conference Board, noted that falling oil prices in recent weeks provided some relief to consumer inflation fears.
• Consumer appraisals of current business conditions improved slightly compared with May. However, perceptions of the labour market softened, with the share of Americans who said jobs are "hard to get" rising to 22.5% from 19.8% the previous month.
• Despite the weaker sentiment, consumers have continued to spend. A government report earlier this month showed consumer spending increased in May despite higher gas prices, with economists expecting steady consumer outlays to support approximately 2.5% annualised GDP growth in the April–June quarter.
• Falling fuel prices could provide further support to consumer confidence in the coming months. Average U.S. gasoline prices have fallen to US$3.85 per gallon, from more than US$4.50 after the U.S.-Iran conflict began in late February.
• While labour market sentiment weakened, economic conditions remain relatively resilient. Job openings held steady at 7.6 million in May, while economists expect the June employment report to show 100,000 jobs added and the unemployment rate remaining low at 4.3%

(Source: Associated Press)