The final reading for June will be published on June 24.
All components of the index slipped, Hsu said, noting a 24% drop in next year’s forecast for business conditions and a 20% decline in consumers’ assessments about their personal finances.
Hsu said about 46% of consumers surveyed blamed inflation, up from 38% in May.
“This quota has only been exceeded once since 1981 during the Great Recession,” she said. “Overall, gas prices have weighed heavily on consumers, which is not surprising given that national gas prices increased 65 percent from last month.”
Half of consumers mentioned gas prices during interviews, she said.
“Consumer spending has long been challenged by fluctuations in consumer sentiment,” said Greg McBride, chief financial analyst at Bankrate. “What we’re seeing this time isn’t that consumers are holding back on spending, it’s just that they’re spending differently. This is an environment in which necessities are consuming more and more spendable family dollars.”
Kurt Rankin, chief economist at the Palestine National Council, wrote in a note how consumers’ reaction from here could help or harm the Fed’s efforts to rein in inflation.
“Consumers will choose either to continue spending despite higher prices, which makes the Fed’s choices more difficult during the second half of this year, or to pull back on spending in response to higher prices — especially on everyday necessities,” he said. “Reducing spending should slow the economy further on the near horizon, but the difference may be in calming the depth of any potential recession in 2023 by making the Fed’s job easier a bit.”
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