Consumer confidence falls for the third consecutive month in July

WASHINGTON — US consumer confidence fell again in July. Higher prices for food, gasoline and just about everything else continued to weigh on Americans.

The Conference Board said Tuesday that its index of consumer confidence fell to 95.7 in July from 98.4 in June, largely due to consumer anxiety over current economic conditions, particularly four-decade high inflation. . It is the lowest reading since February 2021.

The business research group’s Current Situation Index, which measures consumers’ assessment of current business and working conditions, fell from 147.2 to 141.3.

The Federal Reserve is expected to raise its benchmark interest rate again on Wednesday, possibly another three-quarters of a point, in an effort to combat persistent inflation that has set in during the pandemic. The US central bank has already raised rates by a combined 1.25% since May and has already cooled a once red-hot housing market as mortgage rates rise.

US inflation rose to a new four-decade high in June as rising gas, food and rent prices tightened household budgets and pressured the Federal Reserve to raise rates. interest rates aggressively, trends that increase the risk of a recession if consumers pull back. in spending

The government’s consumer price index soared 9.1% over the past year, the biggest annual increase since 1981, with nearly half the increase due to higher energy costs.

Although gasoline prices have fallen recently, the survey closed on July 21 and some respondents may not yet have recorded those price declines.

The board’s expectations index, based on consumers’ six-month outlook on income, business and labor market conditions, fell to 65.3 from 65.8.

Overall, the survey showed fewer Americans think conditions will improve in the next six months and more are pessimistic about their own near-term financial prospects.

Fewer of those surveyed expect to make major purchases like cars or major appliances, and fewer plan to take short-term vacations.

“Looking ahead, inflation and additional rate increases are likely to continue to present strong headwinds to consumer spending and economic growth over the next six months,” said Lynn Franco, senior director of economic indicators at the Conference Board. .

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