U.S. consumer confidence dropped sharply in June, reversing much of May's gains and renewing concerns about the resilience of the American economy amid ongoing trade tensions, job market uncertainty, and fears of a potential recession. The Conference Board reported Tuesday that its consumer confidence index fell 5.4 points to 93.0, down from 98.4 in May.
Economists had expected a modest increase to 100.0, according to a Reuters poll, but the latest reading instead marked one of the steepest declines since the COVID-19-era lows in 2020. It also reflected the sixth consecutive month of weakening sentiment regarding the job market.
"The decline was broad-based across components, with consumers' assessments of the present situation and their expectations for the future both contributing to the deterioration," said Stephanie Guichard, senior economist for global indicators at the Conference Board. "Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory."
The Expectations Index-which measures consumers' short-term outlook on income, business conditions, and the labor market-fell to 69.0, well below the 80-point threshold that typically signals a potential recession. Consumers' assessment of current economic conditions also declined, slipping 6.4 points to 129.1.
A major driver of the downturn was continued anxiety over President Donald Trump's aggressive tariff policy. Although a recent agreement with China to reduce some levies had briefly lifted sentiment, respondents continued to cite concerns about tariffs' long-term effects on prices and economic stability.
Tariffs "were frequently associated with concerns about their negative impacts on the economy and prices," Guichard said.
The Conference Board's report noted that fears of a recession over the next 12 months ticked up slightly, adding to the cautious tone. Consumers across political affiliations expressed diminished confidence, but the steepest declines came from Republican respondents, according to internal data.
Elizabeth Renter, senior economist at NerdWallet, said in a note Tuesday: "As we wait to see the full impact of tariffs on prices, this uncertain sentiment could trigger reduced consumer spending. After all, if you can't be sure of how big your grocery bill will be in coming months, it's difficult to budget for it."
Though inflation ticked up only modestly-2.4% year-over-year in May, up from 2.3% in April-core prices, which exclude food and energy, remained elevated at 2.8% for the third straight month, according to recent government data. Federal Reserve Chair Jerome Powell said last week that some categories, such as electronics, had already shown price increases linked to tariffs.
Consumers responding to the Conference Board survey reported delaying discretionary purchases, especially electronics and homes, though car and appliance spending remained steady.
"In this kind of environment, it's not surprising that consumers are hesitant to make big purchases," said Heather Long, chief economist at Navy Federal Credit Union. "They are sitting on the sidelines and only buying homes, cars and appliances if they absolutely must. This is an 'abundance of caution economy.'"
The survey cutoff date was June 18, prior to the U.S. strike on Iranian nuclear sites but after Israel's bombing of Tehran. Guichard noted that "references to geopolitics and social unrest increased slightly from previous months but remained much lower on the list of topics affecting consumers' views."
