The economic vibes in the U.S. took a notable downturn in June, as consumers became markedly more anxious about the future. According to the Conference Board, the Consumer Confidence Index dropped to 93.0, down from 98.4 in May, marking a 5.4-point drop that effectively reverses half of the gains seen last month. This decline wasn't isolated either—it swept across all demographics and political affiliations, hitting Republicans the hardest.
The Present Situation Index, which gauges how consumers feel about current economic and labor conditions, also fell by 6.4 points to 129.1. Meanwhile, the Expectations Index (which forecasts consumers' views over the next six months) plummeted by 4.6 points to 69.0. That's well below the 80-point benchmark economists use to predict recessions. In other words, consumers aren’t feeling optimistic.
Consumers’ optimism about business conditions, job availability, and future income all took a hit. The percentage of people who said jobs are "plentiful" dropped for the sixth consecutive month, while fewer people expect income increases in the near future. Expectations for the stock market unexpectedly increased, maybe as a result of Wall Street's attention shifting to geopolitical actions like President Trump's order to defuse tensions in the Middle East.
Although there has been a minor increase in the discussion of reducing inflation, tariffs, and inflation remain the top consumer worries. Inflation expectations for the next 12 months dropped to 6.0%, which, while better than earlier months, still paints a pricey picture for the average consumer.
Purchasing plans were mixed. While car-buying intentions held steady and some categories like dining out and fitness saw increased interest, plans to buy electronics and homes declined. U.S.-based travel also took a hit, though international travel interest climbed.
Let’s not sugarcoat it: a consumer confidence dip is usually a red flag for small businesses. Why?
But here’s the silver lining for SMBs:
Stephanie Guichard, the Conference Board’s Senior Economist, emphasized that while consumers remain nervous, the labor market is "still solid." That means there’s room for SMBs to breathe—and plan.
Add in the nuance that consumers' long-term personal financial outlook remains relatively steady, and the picture becomes clearer: short-term caution, long-term resilience.
While consumer confidence has taken a summer stumble, this is not doomsday for small businesses. With smart adjustments and a dose of agility, SMBs can weather the mood shift and even thrive. Being proactive, understanding your customer's psychology, and adapting quickly are more important now than ever.
