U.S. Consumer Confidence Falls Sharply on Job Market Fears

U.S. consumer confidence unexpectedly fell in June, reflecting growing unease over the labor market and rising economic uncertainty. The Conference Board's Consumer Confidence Index dropped 5.4 points to 93.0, reversing much of May’s gain and marking the weakest sentiment in over a year.

The decline was broad-based, cutting across age, income, and political groups, with the steepest drop among Republican respondents. The report attributed the fall to concerns about job availability, trade policy disruptions, and unease over future income prospects.

The share of Americans viewing jobs as “plentiful” declined to 29.2%, the lowest since March 2021, while those saying jobs were “hard to get” stood at 18.1%. The labor market differential, a key measure closely tied to unemployment, narrowed to 11.1, suggesting weakening labor market strength.

“Rising financial anxiety, alongside muted income expectations, signals a cautious consumer outlook for the second half of 2025,” said Tim Quinlan, senior economist at Wells Fargo. He warned that recent resilience in retail may represent “pulled-forward demand” ahead of anticipated price hikes from tariffs.

Tariffs and Policy Impact

The decline in sentiment coincides with economic uncertainties tied to President Donald Trump’s latest tariff announcements. Consumers cited tariffs as a key concern, while inflation expectations eased slightly, dropping to 6.0% from 6.4% in May.

Federal Reserve Chair Jerome Powell addressed lawmakers Tuesday, stating the central bank would need more time to assess inflationary impacts from tariffs before considering rate adjustments. The Fed’s benchmark interest rate remains unchanged at 4.25%-4.50%.

Markets responded with cautious optimism. Stocks rose modestly, Treasury yields dipped, and the U.S. dollar weakened against a basket of currencies.

Housing, Spending Outlook Weakens

A separate housing report showed U.S. home prices fell 0.4% in April, marking the first monthly decline since August 2022. Annual price growth slowed to 3.0%, its weakest pace since May 2023. Despite a rise in unsold inventory, affordability remains strained by high mortgage rates and elevated price levels.

Meanwhile, consumer intentions for big-ticket purchases weakened. Although more Americans planned foreign travel, domestic vacation plans and home-buying intentions fell.

“With more homes for sale, price pressures are easing,” noted Bernard Yaros, lead economist at Oxford Economics. “Still, regional price corrections are likely, especially in markets that overheated during the pandemic.”