Consumer confidence in the U.S. economy declined during July, according to data released by the Conference Board. The consumer confidence index fell to 90.8 from 92.2 the previous month, marking a return to levels that have persisted since the beginning of the year. The decline reverses modest gains recorded in June, when the index had improved as gas prices temporarily receded.
Gas prices have become a significant factor in consumer sentiment as geopolitical tensions intensify. After the U.S. and Israel escalated military operations against Iran, gas prices resumed their upward trajectory. The average price per gallon reached $4.10, reversing earlier improvements when prices had fallen to around $3.70 from peaks exceeding $4.50 in late spring. The Middle East conflict has broader economic implications, as Iran’s closure of the Strait of Hormuz—through which approximately one-fifth of global oil transits—has triggered price increases that accelerated inflation rates.
Food prices represent another significant pressure on household finances and consumer attitudes. Respondents to the survey increasingly cited concerns about grocery costs, which have surged substantially since early 2019. Ground beef prices illustrate the scale of increases, reaching $6.82 per pound in June, a dramatic rise from earlier levels. To manage elevated food costs, consumers have adopted various strategies including increased coupon use, comparison shopping, and dietary adjustments.
Labor market conditions showed mixed signals during the period. U.S. employers added 57,000 jobs in the most recent month, a substantial slowdown from the prior month’s pace. The unemployment rate declined to 4.2% from 4.3%, though much of this improvement resulted from individuals ceasing job searches rather than employment gains. Survey respondents’ references to jobs and unemployment increased modestly, while expectations regarding the labor market six months forward remained negative overall.
Inflation has proven resilient despite earlier hopes for sustained relief. The inflation rate stood at 3.5%, having risen from 3% at the start of the year and jumping further following escalation of the Iran conflict. Consumer sentiment concerning the broader economy remains constrained after five years of elevated price pressures, with potential implications for upcoming electoral contests.
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