The lower income consumer is in their own personal recession

The July UoM consumer confidence index fell to 66 from 68.2, 2.5 pts below expectations and the lowest since November 2023. It remains well below the February 2020 level of 101. Both components were down with the Current Conditions slice in particular at the weakest since December 2022. Both one year and the longer term 5-10 yr inflation guesses fell one tenth m/o/m to 2.9% for each. The range for each was 2.2-2.6% in the two years pre Covid.

Employment expectations remained soft, falling by 4 pts to the 2^nd lowest read since mid 2023 and not far from the lowest since 2011. Also noteworthy, the ‘net income’ component fell to just 1, the weakest since March 2014. A heavy influence here is from the lower income consumer.

So, notwithstanding the moderating inflation, the declining income expectations led to just a 25.3% read of those that ‘expect family income will beat inflation over next 5 year.’ That’s the lowest since the question was first asked in 1998.

Spending intentions continued to fall. Those that said it’s a ‘good time to buy a vehicle’ fell just 1 pt but to the lowest level since November. As for buying a home, intentions fell 4 pts to the least on record dating back to 1978. Intentions to buy a major household item fell to a 14 month low.