Confidence ticks up in July more than expected reflecting diminished pessimism about the future even as the view of current conditions worsens.

The Conference Board consumer confidence index is up to 97.2 in July from an upward revised 95.2 in June (previously 93.0). The July outcome beats the 95.8 consensus expectation in the Econoday survey.

Consumer view of the present situation deteriorates with the current conditions index down 1.5 points to 131.5. The expectations index, on the other hand, is up 4.5 points to 74.4. Even with the rise, the expectations index remains below the 80 threshold the Conference Board says traditionally brings recession.

The decline in current conditions incorporates a slightly more pessimistic view of employment conditions. The consumer view of current job availability weakens for the seventh consecutive month, reaching its lowest level since March 2021, during the pandemic. In July, 18.9 percent of consumers say jobs are hard to get in July, up from 14.5 percent in January.

The consensus looks for confidence a bit better at 95.8 in July versus 93.0 in June and 98.4 in May as tariff and inflation fears have diminished somewhat.

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.