- Lead. The Conference Board’s consumer confidence index fell to 90.8 in July, released July 28, missing the consensus estimate of 92.4 and marking a third consecutive monthly decline — the longest losing streak since early 2023.
- Fact. The Expectations sub-index held at 74.7, a level the Conference Board treats as a recessionary signal; only 24.6% of respondents said jobs were “plentiful,” the weakest reading since 2021.
- Stake. The data land as the Federal Reserve holds its July 29 meeting. Persistent consumer weakness strengthens the case for a rate hold, but still-elevated inflation keeps a September hike in play, with futures markets pricing roughly an 82% probability of a pause today and a 60-40 split over the September outcome.
The Conference Board’s July survey, covering respondents through July 22, produced a headline index of 90.8 — down 1.4 points from June and below the 92.4 forecast tracked by Bloomberg. The decline was the third in a row, extending a run that began in May. The Present Situation Index dropped 3.6 points to 114.9, with the jobs sub-components showing the sharpest deterioration: just 24.6% of respondents described jobs as “plentiful,” the smallest share since 2021, while the gap versus those calling jobs “hard to get” narrowed to its tightest margin in five years.
The Expectations Index — which measures consumers’ six-month outlook on income, business conditions, and the labour market — held at 74.7. The Conference Board has historically flagged readings below 80 as a leading indicator of recession risk. July marks the fourth consecutive month the index has printed below that threshold.
Elevated Food and Energy Costs Weigh on Sentiment
Within the survey’s open-ended responses, references to food and grocery prices appeared more frequently than in prior months. Energy cost concerns, while still present, showed a modest reduction compared to June — consistent with the brief easing in oil prices following the Iran-US pause announcement on July 27, before Brent rebounded sharply on July 29. Survey respondents had no visibility into the IRGC missile attack that broke the ceasefire window after the July 22 cutoff, suggesting the confidence reading may not yet fully capture the latest geopolitical shock to energy prices.
The Fed’s Dilemma in One Number
The consumer confidence data are unlikely to change the Federal Reserve’s calculus for the July 29 meeting — markets had already priced a near-certain hold at 3.50–3.75% before the release — but they complicate the path forward. The softening demand signals embedded in the confidence survey offer the Fed cover to pause through the summer. Against that, June headline CPI came in at 3.5%, well above the 2% target, and oil prices have renewed their upward move. For context on how the tariff-driven trade shock has affected the broader consumer outlook, see US June retail sales, which rose just 0.2% in their weakest monthly gain in five months.
EY-Parthenon described September as “the first meaningful test” for Chair Kevin Warsh, characterising the rate decision as a “60–40 call” for holding through year-end. Bank of America noted that not hiking “could challenge the Fed’s credibility on inflation,” while raising rates would conflict with Warsh’s stated framework of looking through supply-side price shocks. The consumer confidence data reinforce the demand-side argument for staying on hold — but the Fed’s problem is that both sides of its mandate are under pressure simultaneously.