People are getting nervous because of the strange quiet that’s coming over the American economy right now. Month after month, survey after survey, consumer confidence keeps going down, but the number of jobs stays stable enough to keep the official story going. When you go to a shopping center in a suburb of New Jersey or in the middle of Atlanta, everything is half full. People are still spending money, but not in the same way. Not as many extras. More store brands. Even if the data hasn’t caught up yet, it’s hard not to notice that the mood has changed.
In June, the Consumer Confidence Index from the Conference Board fell to 93.0, wiping out almost half of the big rise seen in May. It was planned for that number to rise. Economists thought it would be closer to 100. Instead, confidence fell across all age groups, almost all income levels, and both parties, with Republicans showing the biggest drop. The percentage of people who think jobs are “plentiful” dropped to 29.2 percent, which is the lowest level since March 2021, when shutdowns were still common because of the pandemic.
Still, the unemployment rate is 4.2%. Payrolls haven’t fallen apart. Companies aren’t letting go of a lot of workers in a dramatic, newsworthy way. What they’re doing is less loud and more unsettling in some ways. They’re not adding any new employees. Putting up fewer job openings. Letting death and decay do the trimming. Economists at JPMorgan have started to warn that the unemployment rate could rise to 4.3%. This doesn’t sound like a big deal until you consider how many people are already getting unemployment checks for longer periods of time.
The “no hire, no fire” economy has been getting worse for months. Afar, it looks like it will stay put. From close, it feels dangerous. It’s felt by many. In June, 22.5% of people who answered the Conference Board survey said it was “hard to get a job.” This was the highest percentage since January 2021. That number moves slowly, like a crack in concrete getting bigger. Often, the damage is already done by the time it shows up clearly in the employment report.
Some analysts think that consumer confidence might be the more important factor here, rather than the later one. Overall confidence is still lower than you’d think, according to Michael Green of Simplify Asset Management, even though the unemployment rate is pretty stable and inflation isn’t too bad. Sofia Baig at Morning Consult was more direct. She called June’s small rise in sentiment a “blip” and warned that the overall trend is going down. Even though lower gas prices and a ceasefire in the Middle East brought some short-term relief, the deeper anxiety hasn’t gone away. People still write most of their answers to these surveys about inflation, not the rate of price increases but the weight of higher prices that never went back down.
At the same time, people are changing their plans to buy homes, in part because mortgage rates are still stubbornly high. Single-family home prices actually went down 0.4% in April, according to the Federal Housing Finance Agency. This was the first monthly drop since August 2022. Annual growth slowed to 3.0 percent, which is the lowest level since the middle of 2023. It’s not a crash. But this cooling makes things even less clear for families who are trying to figure out their own financial health.
The employment numbers say things are fine, but the confidence polls say people are getting ready for something worse. Which is true? History always sides with the customer. When enough people act like the economy is getting worse, spending slows down, hiring slows down, and eventually the official numbers match what the surveys said months earlier.
There’s a chance that both signals are telling the truth, but at different times. The job market is where the economy has been. It’s going in the right direction. Right now, those two lines are crossing each other in a way that doesn’t usually end peacefully.
