Inflation Puts Dent in US Consumer Confidence

Consumer confidence in the U.S. hit another low in July, as rising inflation casts a shadow over the economy’s future, Bloomberg reported Tuesday (July 26).

The Conference Board Consumer Confidence Index stood at 95.7, the third decline in as many months. It was the lowest level since February 2021.

With the worsening sentiment, and inflation still high, consumers may keep cutting back on nonessential purchases to save money.

For some concrete examples, companies, even large ones like McDonald’s, have said it seems people are spending most of their money only on essentials with little left over for more spontaneous purchases.

The report noted that current labor market indicators are down. The number of consumers who said jobs were plentiful was now just over 50%. More people also said jobs were hard to get.

This comes as the Federal Reserve has taken action to raise rate hikes, in a bid to try and curb the inflation.

Lynn Franco, the senior director of economic indicators at the Conference Board, said that in the months ahead, inflation and interest rate hikes are likely to keep making “strong headwinds” for both spending and economic growth.

PYMNTS wrote recently that a new survey of U.S. consumers it conducted showed that most consumers “don’t feel that flush.”

See also: Why Retailers Should Worry About Inflation but Dread the Wealth Effect

Fifty-three percent of them said their financial condition is worse this year, and almost a third believe things will get worse in the next 12 months.

And while lower-earning consumers are feeling more pain, PYMNTS’ research shows higher earners aren’t exempt from the troubles either.

“The double hit of the decline in financial wealth from stock market volatility and the high levels of inflation are causing nearly all consumers, regardless of demographic group or income, to adjust their spending,” Karen Webster wrote. “It isn’t only about whether consumers have money to spend, it’s whether they will spend the money they have — and where. When high earners tighten their purse strings, the ripple effect across the economy will be felt.”