Consumer Confidence falls to lowest level since early June

Consumer expectations fell to their lowest level since the beginning of June, according to the latest reading on consumer confidence by the Conference Board.

The Consumer Confidence Index for June fell to 98.7 from 103.2 in May, below expectations for a reading of 100.

The expectations index, which is based on consumers' short-term outlook for income growth, job market, and overall business conditions, fell to 66.4, its lowest reading since March 2013.

The consumer's outlook was driven by increasing concerns about inflation, in particular rising gas and food prices, said Lynn Franco, senior director of economic indicators at The Conference Board. Expectations have fallen well below the reading of 80, suggesting a weaker growth in the second half of 2022 as well as a growing risk of a recession by year-end. Consumer sentiment data from the University of Michigan fell to a new low of 50.2 last week, according to the Conference Board's report.

The University of Michigan's report had gained a lot of investor attention after Federal Reserve Chair Jerome Powell mentioned the inflation expectations component of the data as eye-catching during testimony before Congress last week. Consumer inflation expectations fell to 3.1% from 3.3% on Friday, but this remains above the Fed's 2% inflation target, according to the UMich report.

The Conference Board said on Tuesday that purchasing plans for large items like homes, cars, and appliances had held relatively steady, though this data has cooled since the beginning of the year.

Over the next six months consumer spending and economic growth are likely to be faced with strong headwinds from inflation and rate hikes, Franco said.