The latest CB Consumer Confidence Falls report showed that Americans became slightly less optimistic about the economy in July, reflecting softer assessments of current business conditions and the labor market despite easing inflation expectations. The Conference Board’s Consumer Confidence Index declined 1.4 points to 90.8 from an upwardly revised 92.2 in June, extending the gradual downward trend that has persisted since late 2021.
Although the decline was modest, the report suggests consumers remain cautious about the economic outlook as elevated interest rates, geopolitical uncertainty, and slowing labor market momentum continue to weigh on sentiment. Investors closely monitor consumer confidence because household spending accounts for roughly two-thirds of US economic activity, making the survey an important indicator of future economic growth.
CB Consumer Confidence Falls as Views of Current Conditions Continue to Deteriorate
The biggest weakness in July came from consumers’ assessment of current economic conditions.
The Present Situation Index fell 3.6 points to 114.9, marking its third consecutive monthly decline. Consumers became less optimistic about both business conditions and employment opportunities, suggesting that confidence in the economy is gradually softening even though the labor market remains historically resilient.
The share of respondents describing business conditions as “good” compared with those calling them “bad” narrowed sharply, leaving the balance barely in positive territory. Meanwhile, perceptions of the labor market also weakened as fewer consumers said jobs were plentiful, although the percentage describing jobs as difficult to find declined slightly as well.
According to Dana M. Peterson, Chief Economist at The Conference Board, consumers continue to see little improvement in current economic conditions, while expectations remain restrained despite some resilience in household income outlooks.
CB Consumer Confidence Falls While Future Expectations Stay Weak
Although consumers became less negative about future labor market conditions, overall expectations remained subdued.
The Expectations Index held steady at 74.7, remaining well below the 80-point threshold that has historically been associated with an elevated probability of recession over the following year.
Consumers slightly reduced their expectations for business conditions over the next six months, while confidence regarding future household income also softened. Labor market expectations improved modestly but continued to signal concern about employment prospects.
The survey was conducted between July 1 and July 22, covering a period marked by continuing geopolitical tensions in the Middle East, which remained one of the major concerns cited by respondents.
CB Consumer Confidence Falls Despite Lower Inflation Expectations
One of the more encouraging developments in the report was a moderation in inflation expectations.
Both the average and median expectations for inflation over the next 12 months declined compared with June, suggesting consumers believe price pressures may gradually ease. Nevertheless, 61.3% of respondents still expect interest rates to move higher over the coming year, unchanged from the previous month.
Consumers also remained optimistic about equity markets, with most expecting stock prices to be higher one year from now despite recent market volatility.
Meanwhile, references to food and grocery prices increased in survey responses, indicating that everyday living costs continue to influence consumer sentiment more than broader inflation measures.
CB Consumer Confidence Falls as Recession Concerns Edge Higher
The report also highlighted growing caution regarding the broader economic outlook.
The share of consumers who believe a US recession is “somewhat likely” over the next twelve months increased again in July. However, expectations for a recession remain relatively contained because the proportion of respondents describing a recession as “very likely” declined during the month.
Consumers’ assessments of their current family financial situation improved after three months of deterioration, while expectations for future household finances remained positive, although slightly less optimistic than in June.
These findings suggest households remain financially resilient but are becoming increasingly cautious about the broader economy.
CB Consumer Confidence Falls While Consumer Spending Intentions Remain Resilient
Despite weaker headline confidence, consumers continue planning discretionary spending across several categories.
Demand for housing and automobile purchases continued improving on a six-month moving average basis, while furniture and smartphones remained among the most frequently planned durable goods purchases.
Consumers also indicated stronger intentions to spend on services, including restaurants, streaming services, travel, hotels, air travel, and entertainment activities. Domestic travel plans improved after weakening for much of the year, although expectations for international travel eased slightly.
The divergence between softer confidence and resilient spending intentions suggests households remain willing to spend despite becoming more cautious about economic conditions.
Market Reaction
Financial markets interpreted the report as evidence that the US economy is slowing gradually rather than entering a sharp downturn.
The weaker headline reading reinforced expectations that consumer demand may cool during the second half of the year, although the continued strength in spending intentions and moderating inflation expectations helped ease concerns about a significant deterioration in economic activity.
For investors, the report supports the view that the Federal Reserve may continue adopting a data-dependent approach. Softer consumer confidence could reduce inflationary pressure over time by slowing household spending, but resilient labor market conditions and stable income expectations suggest policymakers are unlikely to signal an aggressive shift in monetary policy based on this report alone.
Following the release, market participants continued focusing on upcoming Federal Reserve communications, labor market reports, and inflation data for additional confirmation of the economy’s direction.
Outlook
The latest CB Consumer Confidence Falls report presents a mixed picture of the US economy. Confidence declined for another month as consumers became less optimistic about current business conditions and employment opportunities, while the Expectations Index remained below levels historically associated with economic expansion.
However, the report also showed encouraging signs. Inflation expectations moderated, household financial assessments improved, and consumers continued planning discretionary spending despite growing caution.
Looking ahead, investors will closely monitor whether weaker confidence begins translating into slower consumer spending. If household demand remains resilient, the US economy could continue expanding despite softer sentiment. Conversely, a prolonged decline in confidence alongside weaker labor market data could strengthen expectations for a more pronounced economic slowdown, making upcoming inflation and employment reports increasingly important for both markets and Federal Reserve policymakers.
