Consumer Confidence Declines Again; Gold Over $4,000

U.S. households grew more pessimistic in July, according to the latest data from the Conference Board, and investors responded by sending gold to yet another record. The Conference Board’s Consumer Confidence Index fell 1.4 points to 90.8 (1985=100), down from an upwardly revised 92.2 in June and continuing a decline that has persisted since late 2021. Views of present conditions weakened more than expectations for the months ahead, widening the gap between how consumers describe conditions today and what they hope will improve. With inflation still gnawing at paychecks and geopolitical tensions persisting, the safe-haven trade in hard assets continues.

The Present Situation Index fell 3.6 points to 114.9, a third consecutive monthly decline, while the Expectations Index remained at recession-signal-flashing 74.7. Only 18.9 percent of respondents described business conditions as “good,” down from 20.2 percent in June, while 17.8 percent called them “bad,” up from 16.5 percent. Labor sentiment also softened: 24.6 percent said jobs are “plentiful”, down from 25.5 percent in June, while 21.5 percent said employment is “hard to get,” down slightly from 21.7 percent. That left the labor differential at a modest plus 3.1 percent, well below the levels recorded during the pandemic rebound.

Forward-looking measures offered mixed signals. A net negative 3.3 percent of households now expect business conditions to improve over the next six months. The labor market outlook, by contrast, grew slightly less negative, though 25.3 percent still anticipate fewer jobs becoming available. Income expectations cooled somewhat: 20.3 percent of consumers expect their incomes to rise, down from 20.7 percent in June, while 13.0 percent expect a decline. Inflation expectations moderated, though more than six in ten consumers still expect interest rates will be higher a year from now. Separately, the share calling a recession “somewhat likely” rose again, even as the share calling one “very likely” declined. Overall, recession expectations remained low.

Disparities across demographic groups persisted. Consumers under 35 and higher-income households remained relatively more optimistic, while the Silent Generation recorded the steepest six-month decline in confidence. Write-in comments kept returning to stubbornly high food and grocery costs, though mentions of oil, gas, and foreign conflict eased during the survey period. The July 1 to 22 survey window covered ongoing conflict in the Middle East, and the Conference Board noted that references to the conflict could increase in revised data given the recent escalation in fighting. 

The Conference Board will release its next report on August 25. Unless wage growth outpaces prices and the job market re-accelerates, households may continue turning to bullion while policymakers debate whether the economic outlook warrants optimism or caution.