Consumer sentiment rose more than expected in July, as Americans expressed increased optimism about future economic conditions and labor market prospects, according to new data from the Conference Board.
The Consumer Confidence Index climbed to 97.2 this month, up from a revised 95.2 in June. Economists had forecast a reading of 95.8. The rise was driven by improving expectations for business conditions, employment, and income, particularly among adults over the age of thirty-five and across nearly all income groups.
The Expectations Index rose to 74.4 in July from 69.9 in the previous month. While still below the level of 80 that the Conference Board associates with recession risk, July marked the highest reading since January and the second consecutive monthly increase. According to the report, “all three components of the Expectation Index improved,” with fewer consumers expecting business and labor conditions to worsen and more anticipating income gains.
Consumers’ assessment of current conditions was little changed. The Present Situation Index fell modestly to 131.5 from 133.0 in June. Slightly fewer consumers said current business conditions were “bad,” and slightly more said jobs were “plentiful,” though the share reporting that jobs are “hard to get” rose to 18.9 percent—its highest since March 2021.
While confidence gains were broadly shared, the report noted that the lowest-income group—those with household income under fifteen thousand dollars—did not see an improvement in sentiment. Confidence rose among Republican-leaning respondents and held steady for Democrats and independents.
Consumers’ twelve-month inflation expectations edged down to 5.8 percent in July from 5.9 percent in June. The report said that “references to high prices and inflation rose,” even as the measured expectation declined slightly. Consumers also continued to cite tariffs as a concern, with most associating them with the potential for higher prices.
Expectations for the stock market improved. The share of consumers expecting stock prices to rise over the next year rose to 47.9 percent in July, compared to 37.6 percent three months earlier. More consumers also expected interest rates to fall, while fewer anticipated further rate hikes.
Spending plans were mixed. Fewer consumers indicated plans to purchase homes or cars, though intentions to buy electronics ticked up. Plans for travel and dining out softened overall, with a slight increase in expectations for international travel and a decline in domestic travel intentions.
Although the headline index remains below the levels seen in 2023, the two-month upward trend suggests that confidence may be stabilizing after a volatile spring. The Conference Board said the cutoff date for the preliminary results was July 20.
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