The bump in optimism from the May 12 trade war truce between China and the United States was short-lived.

The Conference Board's Consumer Confidence Index took a step back in June to 93.0, down from a revised 98.4 (previously 98.0) in May, and below expectations of 99.0 in the Econoday survey of forecasters.

Consumers' assessment of current business and labor market conditions soured, while their short-term outlook for income, business, and labor market conditions remained pessimistic and well below the threshold that indicates a recession ahead.

Tariffs remained on top of consumers' minds and were frequently associated with concerns about their negative impacts on the economy and prices. Inflation and high prices were another important concern cited by consumers in June, the report said. References to geopolitics and social unrest increased slightly from previous months but remained much lower on the list of topics affecting consumers' views.

U.S. consumers had a less optimistic assessment of current business conditions, while their views on job availability weakened for the sixth straight month. Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly, the Conference board said.

The Conference Board said the share of consumers expecting a recession over the next 12 months rose slightly in June and remains above 2024's levels.

Average one-year inflation expectations fell to 6 percent in June from 6.4 percent in May.

On a six-month moving average basis, purchasing plans for autos jumped to the highest level since December 2024, while plans to buy a home declined. Likewise, plans to buy big-ticket items were mixed, while intentions to purchase services in the coming months weakened compared to May, with almost all services categories declining.

President Trump’s pause in tariffs has helped stabilize the economy and consumer sentiment. The consensus looks for confidence at 99.0 versus 98.0 in May and 85.7 in April.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.