The Conference Board’s confidence index fell to 95.7 points in July, marking its third straight drop.
Consumer confidence in the United States continued its negative spiral in July for the third consecutive month, amid lingering fears of recession, according to the Conference Board index released on Tuesday.
The index now stands at 95.7 points, a drop of 2.7 points compared to June, the data for which was also revised downwards (98.4 points once morest 98.7 previously announced).
The decline is mainly due to a drop in the component measuring consumers’ perception of the current economic situation, “a sign that growth slowed at the start of the third quarter”, commented Lynn Franco, senior director of economic indicators. at the Conference Board, cited in a press release.
This component of the index rose to 141.3 points once morest 147.2 the previous month.
The future economic situation index has held up relatively well (at 65.3 points once morest 65.8 in June) but remains at a low level, “suggesting that the risks of recession persist”, according to Lynn Franco.
When households expect prices to continue to rise, they consume even less, which risks aggravating a recession, while consumption is the locomotive of the American economy, representing almost three quarters of GDP.
“As the Fed raises interest rates to counter inflation, purchase intentions for cars, homes, and major appliances all contracted further in July,” she continued.
The American central bank, the Fed, still hopes to be able to slow inflation without causing a recession, and should proceed on Wednesday to a fourth increase in its key rates.
“Going forward, inflation and further interest rate hikes are likely to continue to pose strong headwinds to consumer spending and economic growth over the next six months,” said Lynn Franco.