US Consumer Confidence Declines Amid Rising Costs

Singapore, Singapore Jul 28, 2026 ALN: [WASHINGTON] US consumer confidence fell in July as Americans’ views about current business conditions and the labour market deteriorated. The decline in consumer confidence is a significant indicator of the overall economic sentiment among the public, which can influence spending patterns and economic growth.

The Conference Board’s gauge of confidence decreased 1.4 points to 90.8 after an upward revision to the prior month, data released on Tuesday (Jul 28) showed. The median estimate in a Bloomberg survey of economists was 92.4, indicating that the actual figure fell short of expectations. This discrepancy highlights a growing concern among economists and analysts regarding consumer sentiment and its implications for the broader economy.

An indicator of present conditions dropped to the lowest since 2021, while a measure of expectations for the next six months remained unchanged. This stagnation in expectations, despite a decline in current conditions, suggests that while consumers are wary of immediate challenges, they are not overly pessimistic about the future, which can be a stabilizing factor for the economy.

Elevated petrol and food prices likely weighed on US households, underscoring broader concerns about persistent inflation and the rising cost of living. Inflation has been a persistent issue in the US economy, driven by various factors including supply chain disruptions, increased demand post-pandemic, and geopolitical tensions affecting energy prices. The rising costs of essential goods can significantly impact disposable income and consumer spending, leading to a potential slowdown in economic growth.

Hiring, meanwhile, has shown signs of slowing after a strong spring. The labour market had been robust earlier in the year, with many sectors experiencing significant job growth. However, the recent slowdown raises concerns about the sustainability of this momentum, particularly as companies reassess their hiring needs in response to changing economic conditions.

The Conference Board survey showed that perceptions of the job market softened in July. The share of consumers who said jobs were plentiful declined to 24.6 per cent, while the share saying jobs were hard to get also edged lower. This shift in perception can indicate a more competitive job market, where available positions may not be as abundant as previously thought, leading to increased anxiety among job seekers.

The difference between these two – a metric closely followed by economists – narrowed to the smallest since 2021. This narrowing suggests a tough labour market for job seekers, as it indicates that while there are still jobs available, the competition for those positions may be increasing, potentially leading to longer job searches and greater difficulty for individuals entering the workforce.

The survey period for the report was July 1-22, a span that saw prices at the pump fall to their lowest level since March and then rebound as renewed hostilities in the US-Iran conflict sent oil prices higher. The fluctuations in oil prices can have a direct impact on consumer behavior, as rising fuel costs can lead to increased transportation expenses, affecting everything from commuting to the prices of goods and services.

The US paused strikes over the weekend, calming markets and sending prices lower. This temporary stabilization in oil prices may provide a brief respite for consumers, but the underlying volatility in the market remains a concern. Consumers are likely to remain vigilant about price changes, particularly in essential goods.

The report indicated that while references to gas prices eased, they remained elevated. Respondents also made more comments about grocery prices. The increasing focus on food costs reflects broader trends in consumer behavior, as families adjust their budgets to accommodate rising prices for basic necessities.

Looking ahead, respondents in the Conference Board survey were more pessimistic about business conditions in the months ahead. This outlook could signal a potential slowdown in economic activity, as businesses may become hesitant to invest or expand in an uncertain environment. However, they were a bit more optimistic about the outlook for the labour market, suggesting that while businesses may be cautious, there remains some confidence in job creation and stability in employment.

US consumers have continued to spend despite concerns about the cost of living and the labour market. This resilience in consumer spending is crucial for the economy, as consumer expenditures account for a significant portion of economic activity. US retail sales rose for the fifth consecutive month in June, and economists expect consumer outlays helped drive economic growth in the second quarter. This continued spending indicates that consumers are willing to prioritize certain expenditures, potentially viewing them as essential despite rising costs.

Tuesday’s report showed Americans plan to continue to spend on big-ticket items and services like restaurants over the next six months. This intention to spend can be seen as a positive sign, as it reflects consumer confidence in their financial situations, even amid rising costs. Travel intentions also picked up, suggesting that consumers are eager to return to pre-pandemic activities, which could further stimulate economic recovery.

The Commerce Department is set to release second-quarter gross domestic product and June consumer spending, income and inflation data on Thursday. These forthcoming reports will provide additional context regarding the health of the economy and consumer behavior, offering insights into how households are navigating the current economic landscape. Analysts will be closely watching these figures to gauge whether consumer spending can sustain its momentum and contribute to ongoing economic growth.

In summary, the decline in consumer confidence amid rising costs reflects a complex interplay of factors affecting the US economy. While immediate concerns about inflation and job availability weigh on consumer sentiment, the willingness to spend on essential and discretionary items suggests a degree of resilience. The upcoming economic data will be critical in understanding the trajectory of consumer confidence and its implications for the broader economy.