June’s small overall decline in consumer confidence was entirely due to households with incomes in the top third of the distribution, who more frequently mentioned the negative impact of tariffs—cited by 45%, up from 30% last month, The University of Michigan’s Consumer Survey reports.
Most of the June slippage was concentrated in prospects for the national economy, with the unemployment rate expected to inch upward instead of drifting downward in the year ahead. Interest rates were anticipated to rise by the fewest respondents in six years, and declines in mortgage rates have begun to have a positive impact on home buying. While more negative trade news will act to decrease consumer spending, the persistent overall strength in consumer confidence is still consistent with growth of real personal consumption expenditures by 2.5% during the next twelve months.
New Record Economic Expansion
The U.S. expansion is on the verge of setting a new record. The ten-year expansion from June 2009 to June 2019 has now tied the prior record from March 1991 to March 2001. Next month it will become the longest expansion since the mid-1850s.
Persistent Strength in Personal Finances
Favorable trends in personal finances remained widespread, with 53% of all households reporting improved finances, and 44% of households expected financial gains during the year ahead—both figures were largely un-changed during the past year at those favorable levels. Across all households, a median income increase of 2.0% was anticipated in June, for those under 45, income gains of 4.3% were anticipated during the year ahead.
Buying Attitudes Improve
Buying attitudes toward durables rose to their best level in six months, with the renewed strength mainly due to those with incomes in the bottom two-thirds. Home buying improved due to lower mortgage rates and confidence in future incomes.