Consumers are looking into their crystal balls and they don't like what they see. Even though the present still looks bright, the future is looking darker.
July's Consumer Confidence Index (CCI) continued to decline in July as it has been since mid-2021 (down to 95.7), led by its falling expectations component (down to 65.3) (chart below). The current conditions component edged down in July, but remains high (at 141.3).
While inflation continues to erode the purchasing power of consumers, the labor market remains strong. In July, only 12.3% of the CCI survey respondents said that jobs are hard to get, while 50.1% said jobs are plentiful (chart below).
Consumer spending growth slowed during H1-2022. It should continue to grow at a slow pace during H2-2022. Real GDP growth is likely to be weighed down further by residential investment, net exports, and capital spending over the rest of this year.