Consumer confidence picks up but outlook for spending still cautious

The Conference Board Consumer Confidence Index® recovered somewhat in June (after rapid declines between February and April) but still remains well below prepandemic levels. What does the June improvement in confidence mean for future consumer spending? Recent drops in consumer expenditure have been mostly driven by falling spending on services, which moved in tandem with pandemic shutdowns and reopenings. Spending declined sharply in March and April, then increased in May. The higher level of confidence in June reflects the reopening of the economy. The Conference Board therefore estimates that spending also increased further in June, especially for services such as retail and restaurants. Other delayed spending on services, such as health care procedures, may have also received a boost from pent-up demand. Overall, the latest confidence measure shows consumers are more optimistic but still cautious. Going forward, spikes in new COVID-19 cases in several US states, as well as persistent job losses and income weakness, may mean consumers will once again forgo spending in the second half of the year.