Americans' confidence in the U.S. economy declined in July, with rising gas prices and renewed conflict between the U.S. and Iran contributing to the downturn. The Conference Board reported Tuesday that its consumer confidence index decreased to 90.8 for the month, down from 92.2 in June.
Consumers' assessments of current business and labor market conditions saw a notable drop, with the index falling 3.6 points to 114.9. This marks the third consecutive monthly decline in this area. However, views on near-term future conditions remained stable, holding steady at 92.2.
Consumer attitudes had seen a modest improvement in June as gasoline prices receded from over $4.50 a gallon in late April and early May to approximately $3.70. This respite was short-lived, however. As fighting in the Middle East intensified, the average price for a gallon of gas in the U.S. began to climb again, reaching $4.10 on Tuesday, according to AAA.
The conflict between Iran and the U.S. escalated in late February, leading Iran to shut down the Strait of Hormuz, a critical chokepoint for global oil transport. This action contributed to a spike in gas prices and accelerated inflation, which in turn reduced Americans' inflation-adjusted incomes.
Write-in responses from the survey, collected between July 1 and July 22, continued to reflect consumer pessimism. While references to gas prices in the responses decreased slightly, they remained at an elevated level. Conversely, mentions of food and grocery prices increased among respondents. The number of consumers citing war and geopolitics as concerns also decreased this month, though The Conference Board anticipates that the recent escalation in U.S.-Iran tensions may lead to a rise in these mentions in the next survey period.