U.S. Consumer Confidence Rises in July, But Expectations Still Signal Caution — Evening Brief – 07.29.25
U.S. consumer confidence posted a modest improvement in July, with The Conference Board’s Consumer Confidence Index climbing to 97.2, up from a revised 95.2 in June and beating consensus expectations of 95.9. The July reading marks a continuation of the stabilization trend seen since May, suggesting that sentiment may be recovering after April’s sharp drop. However, the index remains well below the elevated levels recorded in 2023, indicating that consumers remain cautious amid persistent economic uncertainty.
According to Stephanie Guichard, senior economist for Global Indicators at The Conference Board, “Consumer confidence has stabilized since May, rebounding from April’s plunge, but remains below last year’s heady levels. In July, pessimism about the future receded somewhat, leading to a slight improvement in overall confidence.”
Digging deeper, the Present Situation Index—which measures consumers’ assessment of current business and labor market conditions—dipped to 131.5 from 133.0, reflecting some softening in perceptions of today’s economic environment. In contrast, the Expectations Index—a gauge of short-term outlooks for income, business, and labor conditions—rose 4.5 points to 74.4, the highest since March. While that’s a positive development, the index has now remained below the key 80 threshold for six consecutive months, a level historically associated with a higher likelihood of economic contraction over the next year.
Inflation expectations continue to ease gradually, with the average 12-month inflation outlook slipping to 5.8% in July, compared to 5.9% in June and a peak of 7% in April. This trend may signal that consumers are beginning to feel some relief from inflationary pressures, though expectations remain elevated relative to historical norms, potentially affecting discretionary spending.
On the labor front, sentiment showed mixed but mildly encouraging signals. The percentage of consumers anticipating an improvement in business conditions over the next six months edged higher to 18.4%, up from 17.1% in June. Meanwhile, those expecting fewer jobs declined marginally to 25.4%, from 25.7% the month prior. While these movements are incremental, they point to a gradual reduction in economic anxiety.