U.S. consumer confidence softens in July as households grow cautious

The Conference Board said its Consumer Confidence Index fell 1.4 points to 90.8 in July from an upwardly revised 92.2 in June, a sign that households were turning more guarded even as parts of the U.S. economy held up. Economists surveyed by The Wall Street Journal had expected 92.0, underscoring how the July reading came in below consensus.

The softer reading matched a broader turn in household mood. The Conference Board said consumer assessments of the present situation weakened for a third straight month, while households’ perceptions of the labor market remained generally weak. One present-situation measure fell to its lowest level since February 2021, and a key labor-market indicator also reached its weakest point since February 2021, a combination that points to more caution around jobs, wages and current spending conditions.

That matters because consumer spending is the main engine of U.S. growth, and the shift in confidence usually shows up first in what families say they intend to buy before it appears in sales or hiring data. When households feel less secure about income or employment, they are more likely to delay travel, dining and durable-goods purchases, trade down to cheaper options or hold back cash for essentials such as rent, food and gasoline. The July decline adds another data point for retailers, policymakers and investors trying to judge whether the economy is cooling in an orderly way or losing momentum more abruptly.

The July figures also pointed to a mixed consumer picture rather than a clean collapse in sentiment. The University of Michigan’s Surveys of Consumers put its Index of Consumer Sentiment at 61.8 in July, up from 60.7 in June, showing that different household surveys were sending different signals even as the Conference Board measure slipped. That split leaves the broader reading of consumer behavior more nuanced: spending has not stopped, but the caution surrounding it has become harder to ignore.

The July drop followed a volatile spring. In April, consumer confidence unexpectedly improved, even as higher gasoline prices remained a worry. By late July, the mix of stubborn prices, uneven wage gains, elevated borrowing costs and job-market concerns had sharpened the sense that households were becoming more selective. For the rest of the year, that wariness could make demand more uneven for businesses and complicate the outlook for the Federal Reserve.