On June 28, local time, The Conference Board released data showing that the U.S. consumer confidence index dropped further to 98.7 in June from 103.2 in May, the lowest level since February 2021, reflecting the High inflation levels have had a serious impact on U.S. consumer confidence. At the same time, the latest consumer confidence data also affected market sentiment. U.S. stocks markets ended sharply lower on the day amid widespread selling, with investors increasingly concerned about rising recession risks and declining corporate earnings prospects.
△Bloomberg reported that dragged down by inflation, the U.S. consumer confidence index hit a 16-month low.
Market confidence has been frustrated
Data released by the Conference Board that day showed that the U.S. consumer confidence index fell to 98.7 in June from the revised value of 103.2 in May, lower than the market expectation of 100. It was the first time it fell below 100 since February 2021. It hit the lowest level in 16 months, reflecting that inflation continues to suppress consumer confidence.
At the same time, the U.S. consumer expectations index fell sharply to 66.4 in June from the revised value of 73.7 in May, hitting the lowest level since March 2013. The indicator, which reflects expectations for the next six months, fell to its lowest level in nearly a decade, reflecting U.S. consumers' growing pessimism about the outlook for income, the economy and the labor market.
Consumers expect prices to rise in the coming year at the fastest rate since data began to be collected in the 1980s. In addition, about 30% of respondents expect business conditions to worsen in the second half of this year, the highest proportion since the peak of the financial crisis in March 2009.
After the Conference Board released a series of bleak consumer survey data, U.S. stocks lost their rebound momentum earlier in the day on the 28th. As of the close of the day, the Dow Jones Industrial Average fell 1.56% to 30,946.99 points. The Nasdaq Composite Index fell 2.98% to 11181.54 points. The S&P 500 index fell 2.01% to 3821.55 points.
As a series of data reflect that the high level of inflation has had a serious impact on American consumer confidence, and the Federal Reserve is using radical interest rate measures to curb inflation, concerns about a possible economic recession in the future have continued in recent days. Putting pressure on the U.S. stock market.
△ Reuters reported that Wall Street closed sharply lower as consumer pessimism stirred concerns about economic growth.
Recession risks rise
Analysts believe that as the Federal Reserve aggressively raises interest rates to curb inflation, higher borrowing costs may lead to fewer purchases of big-ticket items such as homes, cars and appliances. At the same time, domestic and outbound travel demand is also slowing due to factors such as rising air ticket and gasoline prices.
Lynn Franco, senior director of economic indicators at The Conference Board, said: "Consumers' concerns about inflation, especially rising gasoline and food prices, have heightened their worries about the economic outlook. Now the expectations index has "Well below 80, it indicates that consumers believe that growth will slow in the second half of 2022 and the risk of recession is increasing by the end of the year," Cristian Tiu, a professor at the School of Management at the State University of New York at Buffalo, told . A reporter from China Central Radio and Television Station said: "The news about consumers is very bad, not just in terms of the economy, but in almost every aspect, actually very bad. So, no wonder people are so pessimistic, most likely It's a change in consumer behavior. Consumer confidence is actually related to inflation and the expectation that high inflation will last for a longer period of time. The actual impact may be greater than we think. People are forming inflation expectations. Thinking that the price of this one has risen a little, the price of the other one may rise a little more.”
Bloomberg analysis said that in the context of inflation expectations being formed, the risk of economic recession is increasing, and concerns about the direction of the economy may become stronger. Increasingly affecting consumer behavior, leading to a downward spiral in demand.
The latest Conference Board consumer confidence index also further strengthened the impact on the market after the release of the University of Michigan consumer confidence index last week.Affected by continued high inflation and bleak economic prospects, the final value of the June consumer confidence index released by the University of Michigan last week was 50.0, significantly lower than the 58.4 in May, and has fallen to a historical low. Since consumer spending is the main driver of U.S. economic growth, if consumer confidence continues to be sluggish and ultimately pulls down consumer spending, it will further drag down the U.S. economy and intensify the risk of economic recession.
Economists previously surveyed by " Wall Street Journal " believe that the possibility of the U.S. economy falling into recession has greatly increased. The probability of the economy falling into recession in the next 12 months is as high as 44%. This probability usually only occurs when the economy is on the verge of recession or This only occurs when there is an actual recession. International Monetary Fund (IMF) President Georgieva also recently stated that as inflation rises sharply and the Federal Reserve raises interest rates, the risk of economic recession facing the United States is increasing. (CCTV reporters Gu Xiang and Liu Xiaoqian)
Source: CCTV News Client
