The consumer continues to send a warning signal.
Consumer confidence fell to its lowest level since 2014 as concerns over inflation, gasoline prices, and the labor market weighed heavily on household sentiment. Inflation expectations increased, while more consumers expect interest rates to move higher over the next year. Perhaps most notable was the decline in buying intentions for homes, autos, and major appliances, suggesting consumers are becoming increasingly cautious about discretionary spending. Views of both current economic conditions and the six-month outlook deteriorated significantly.
While spending has remained resilient thus far, confidence indicators often weaken before consumer behavior changes. With the consumer accounting for roughly 70% of U.S. GDP, this trend is worth watching closely.
